Even the biggest ESG ETFs don't have the best ratings
Weekly Newsletter (11 May 2023)
Happy Thursday! Welcome to this week’s Q-ESG newsletter.
Here are some key developments and learning resources to help you on your ESG finance journey!
What’s happening?
[1] Even the biggest ESG ETFs don’t have the best ratings
Why this matters: Blackrock’s $13 billion ESG-focused ETF received a rating downgrade from AAA to AA by index provider MSCI. This is going to cause a headache to ESG marketers. Has ESG labeling become a numbers game? Read more here.
[2] Australia to launch its first sovereign green bond in 2024
Why this matters: This is the country’s first green bond. The regulator also admits it is behind other developed markets in developing ESG standards. Read more here (account required).
[3] How will oil companies spend all that cash?
Why this matters: Oil companies have a bumper crop of cash thanks to skyrocketing oil price. One way to spend the cash is to pivot to renewables, another one is to buy back shares from investors and bow out gently when the time comes to stop drilling oil. Read more here (account required).
[4] Aswath Damodaran said ESG investing is ineffective
Why this matters: When the dean of valuation speaks, you may want to pay attention. He argues that ESG investing is flawed and does not help allocate capital to the right causes and two groups of people — the naive and the opportunists — are the biggest promoters of this. Read more here (account required).
Explain to me like I am an eight-year-old
Greenwashing
When a person claims to do good but is actually over-stating his or her good deed. Example: you cleaned only your room today but told your Mum that you also clean your brother’s.
Books/learning resources
Quantitative Methods for ESG Finance (Cino Robin Castelli, Cyril Shmatov)
I was really excited when this book came out because there were so few books that cover the topic of quantitative finance and ESG. The book does well in providing a comprehensive view of the field, but does not go deep. It is a good starting guide to get familiar with topics like ESG ratings and climate models. Amazon link here.