Hi friends and new readers, welcome back to ESG Investing, an informative database dedicated to informing ESG interested investors with all the present and future ESG governance proposals announced by key public companies.

What Is Going On?

Investors can expect to see a surge of sustainable investing ESG in 2021.  

There are different investing philosophies. You don’t need to be a savvy investor who critically monitors the market to have heard of ESG investing or to understand the philosophy. Like all investing, ESGs are a reflection of social and cultural trends and values (i.e., consumer trends) that you and I dictate and mold.

ESG investing is gaining inertia, both by investors that are more prudent with the types of companies they invest in as well as those aiming to reduce portfolio risk. In 2020, global sustainable funds pulled in US$45.6 billion during the first quarter, compared to an outflow of US$284.7 billion for the overall fund during the 2020 panic-induced market sell-off.

What Is Causing Activity?

Some have said that the rise can be credited to an unnerving 2020 which saw the recognition of systemic risks such as social inequalities and the importance of health and wellbeing. Though the COVID-19 pandemic has heightened the appetite, companies pursuing sustainable goals for environment, social and governance factors (ESG) is not a recent development. I would suggest that it might be more apt to state that the pandemic is accelerating what was already occurring.

There have been impressive ESG flows since 2016. In 2016, iShares’ ESG MSCI USA ETF (ESGU) launched, attracting roughly US$6.7 billion of inflows (in 2019). They also saw its AUM increase more than 30-fold. Leaving it with US$7.15 billion in assets making it the largest ESG ETF.

In 2018, Vanguard launched the Vanguard ESG U.S. Stock ETF. The ETF tracks the performance of the  FTSEUS All Cap Choice Index (market cap weighted index comprised of large, mid and small-capitalization stocks). The fund has US$1.57 billion as assets under management and an expense ratio of 0.12%.

What Makes 2021 So Special?

A key administrative goal of U.S. president Joe Biden is advancing the Green economy. On January 27, 2021 the president of the United States, Joe Biden, signed an Executive Order that directed federal officials to construct a blueprint for converting all (federal, state, local and ‘tribal’) fleets to clean and zero-emission vehicles.

To quantify this, that is roughly 650,000 vehicles. While laudable, that is a heavy undertaking.

Fortunately, there is a company Ideanomics, Inc. (NASDAQ:IEDEX) that appears primed to successfully complete the task. Ideanomics is a global company that facilitates the adoption of commercial electric vehicles. Their electronic vehicle division, Mobile Energy Global (MEG) provides group purchasing discounts on commercial electric vehicles, EV batteries and electricity. As well as financing and charging solutions.

To broaden their position, on March 9, 2021, Ideanomics acquired a 20% stake in Energica Motor Company (Energica)– a leading manufacturer of high-performance electric motorcycles. The significance of this is much of the critical rhetoric on electric vehicles is battery life.

This too is changing, with Energica being at the forefront with state-of-the-art battery technology development. The global high performance electronic motorcycle market is growing at a compound annual growth rate (CAGR) of over 35% from 2019-2024.

What About the Mining Industry?

Anglo-Australian multinational mining corporation, Rio Tinto Group, will support two climate proposals at its next shareholder meeting.

For the first proposal, the company will back a motion from Market Forces requesting it to disclose: short; medium; and long-term, targets for greenhouse gas (GHG) emissions from its own operations. The motion will also request disclosure of its performance against those targets. Though previously unsuccessful (rallying only 37% of shareholder votes), this is a great sign.

Secondly, Rio Tinto Group will be asked to enhance its annual review of industry association memberships to ensure consistency with the Paris Agreement.

The mining industry has faced increased scrutiny over its environmental governance decisions. For some, the veil of secrecy and resistance to disclosure is a continued source of frustration. These steps from the world’s iron ore producer, if endorsed, will significantly elevate the ESG standard across all non-renewal energy resource industries.