Investor Relations Week: Scrutiny of ESG Ratings, Anti-Awakening Campaigns Against Apple and Disney, and Hong Kong Finally Drops Quarantine Policy

– According CNBC, companies that assign ESG ratings to companies are subject to scrutiny by the US Senate. According to a statement, incumbent Senator Pat Toomey, R-Pennsylvania, a ranking member of the Senate Banking, Housing and Urban Affairs Committee, sent letters to more than a dozen rating companies asking for transparency in the methods used. to assign ESG ratings. In it, Toomey asserts that ESG rating companies have a unique ability to influence valuable global ESG assets and requests copies of non-proprietary methodologies used by companies to assess ratings. It also asks for descriptions of compliance burdens on rated companies, data collection methods, possible political biases and conflicts of interest.

The New York Times (paywall) reported that Vivek Ramaswamy, a conservative investor, has two new targets in his anti-ESG campaign – apparently with backing from Peter Thiel and Bill Ackman. Ramaswamy sent letters to the CEOs of Apple and Disney urging them to refrain from making political statements on behalf of their companies or making hiring decisions based on race, gender or political beliefs.

Ramaswamy has become “one of Wall Street’s most prominent critics of the ESG investing movement,” the paper said, after launching Strive Asset Management earlier this year — a vehicle he says will fight the pressure on companies to consider Liberal politics before financial results. Its first energy-focused ETF was launched last month and already has around $320 million in assets. Strive’s second fund, the Strive 500 ETF, which invests in large public companies, launched this week. The NYT said Ramaswamy’s plan “is to use the power of shareholder votes to refocus big business on maximizing profits, a goal that Ramaswamy says boards have moved away from.”

– Hong Kong will abandon its strict hotel quarantine for inbound travelers which has “eroded the city’s status as a financial hub, hammered its economy and sparked an exodus of residents”, reported the FinancialTimes (pay wall). The policy, which at one point required visitors and residents to self-quarantine in a hotel for three weeks, had been in place for two and a half years, essentially cutting the city off from the rest of the world as well as the mainland. China. John Lee, the region’s chief executive, said the quarantine requirement would be lifted from Monday, but travelers would still be subject to testing and monitoring for three days after landing, the newspaper added. .

Reuters (paywall) reported that Norway’s $1.2 billion sovereign wealth fund said it would push its portfolio companies to reduce their greenhouse gas emissions to net zero by 2050, in line with the Paris Agreement. The fund holds an average of 1.3% of all listed global stocks. As part of the new plan, it will favor dialogue with the 174 companies which are the largest emitters of greenhouse gases and which represent 70% of the fund’s emissions via its holdings.

“They will be the priority,” said fund CEO Nicolai Tangen. ‘So more frequent follow-ups, and more specific follow-ups. They will see more pressure from us than other companies. Still, the fund reiterated that it would not divest from large issuers to achieve those goals. Instead, he said he would be an “active shareholder” to make the change.

– UN Secretary-General Antonio Guterres says developed economies should impose an additional tax on the profits of fossil fuel companies, with funds transferred to countries affected by climate change and households struggling with climate change. cost of living crisis, CNBC reported. In an address to the United Nations General Assembly in New York, António Guterres described the fossil fuel industry as “reveling in hundreds of billions of dollars in subsidies and windfall profits as household budgets shrink and our planet is burning.”

Fossil fuel companies and their “enablers” needed to be held accountable, he added: “This includes banks, private equity, asset managers and other financial institutions that continue to invest and ensure carbon pollution”.

– The FT reported that many new thematic equity funds in Europe are struggling to attract significant client inflows, “despite booming demand for thematic products in general,” the research suggests. Thematic investing is the fastest growing segment of equity funds, with assets under management in narrowly focused investment vehicles growing 200% over the past three years to reach €300 billion ($293 billion) at the end of June 2022, according to data from Broadridge. But less than a quarter (24%) of thematic equity funds launched in the past five years have raised assets of €300m or more – Broadridge’s benchmark for a commercially successful launch.

– The FT also reported that Ark Investment Management chief executive Cathie Wood has stepped down as portfolio manager of the firm’s two index funds, in what she described as “the third overhaul of the management roster of the company’s portfolio in as many months”. Will Scherer, until now chief commercial officer of the company, has been named portfolio manager of the $192 million 3D Printing and $110 million Israel Innovative Technology ETFs, the company revealed.

Wood remains Ark’s chief investment officer, as well as the portfolio manager of the actively managed funds. In June, Sam Korus and Nicholas Grous were appointed associate portfolio managers. Until then, Wood was the company’s sole portfolio manager. This month, Korus was reassigned as director of research, while former client portfolio specialist Dan White was elevated to associate portfolio manager. The document noted that “Ark has drawn criticism for potential key person risk due to Wood’s centrality to the firm’s fund management operations.”

– HSBC Holdings will stop funding thermal coal expansion from funds it actively manages with immediate effect, marking an acceleration of a broader commitment it made last year, according to Reuters. Thermal coal, a cheap source of energy widely used in Asian markets where many of HSBC’s customers are based, is one of the fossil fuels most responsible for climate-damaging emissions. HSBC said last December it would reduce exposure to thermal coal financing, across all of its businesses, including asset management, by at least 25% by 2025 and 50% by 2030. , although customers with thermal coal assets in non-EU and non-OECD markets could be funded to global phase-out by 2040.

The Wall Street Journal (paywall) reported that, according to people familiar with the matter, Instacart does not intend to raise much capital in its IPO and instead expects most of the listing to come from selling the shares of employees. In meetings with potential investors, Instacart executives said they don’t plan to issue many new shares in the IPO, the people said. Selling stock for most employees could help Instacart retain talent. Listed stocks could also make Instacart more attractive to new hires than start-ups that have decided to wait for a better market to sign up.

The IPO market is heading for its worst year in decades, leaving some start-ups with few options but to spend their cash reserves while waiting for the stock market to calm down.

– According The Guardian, the fast food industry wants to reverse one of the biggest union success stories in recent US history by trying to stop a new law in California that will establish an industry council to ensure the sector deals with wage standards and other regulations such as safety. The Fast Food Accountability and Standards Recovery Act was signed into law by California Governor Gavin Newsom on September 5, seen as a major boost for a US labor movement seeking to build on a wave of campaigning of unionization. The law paves the way for a council that includes workers, state regulators, franchises and their parent companies.

The industry is mobilizing to try to overturn the law, saying it will hurt businesses and lead to a 20% increase in menu prices due to the possibility of wages rising by up to $22 an hour l ‘next year. The industry also says the law will not strengthen worker protections.

– A “crypto shakeout” is engulfing C-suites as CEOs begin to step down, according to Bloomberg (pay wall). “The epic industry shake-up, which has cost thousands of jobs and sparked a consolidation cycle, is reaching the corner office,” the news agency said, adding that crypto exchange Kraken announced on Wednesday. that co-founder Jesse Powell would step down as CEO. , who will be replaced by Managing Director David Ripley. The shakeup comes shortly after Genesis’ Michael Moro and Bitcoin evangelist Michael Saylor, as well as Alameda Research’s Sam Trabucco, all stepped down from leadership positions.

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