PLANADVISER - September/October 2021 - 17

investment decisions, including at the
financial instrument level, " wrote S&P
Global, estimating that " sustainable bond
issuance, including green, social, sustainability
and
sustainability-linked
five-times
bonds,
could
collectively exceed $1 trillion this
year-a near
increase
over
2018 levels. " That is, it said, assuming the
numbers reported and totaled are trustworthy.
If some stock funds are any indication,
that trillion could need downsizing.
According to an InfluenceMap study
reported on in the Financial Times, 130
supposedly climate-focused funds-e.g.,
" fossil fuel reserves free " or " fossil fuel
screened " -collectively hold $153 million
in shares of either oil company or oil
service company stock. It also reported
that 72 funds " were found to be misaligned
with the Paris agreement goal of limiting
global warming to well below 2 degrees
Celsius. " Total assets in the tainted funds
were more than $67 billion.
" It's very hard for investors to be able
to accurately ascertain whether funds
that are branded [as climate-focused]
are actually Paris-aligned or not, " InfluenceMap
analyst Daan Van Acker was
quoted as saying.
What Does That Mean?
Investors trying to determine a company's
compliance with ESG standards
will likely encounter vague terminology
and
conflicting
naming
conventions.
The " Journal of Environmental Investing
Report 2020 " cited " over 20 different
labels[-such as green bonds, ESG bonds
and climate awareness bonds-]being
used for sustainable debt instruments,
which all align with different [ESG] guidelines
and frameworks, " S&P Global wrote.
Investors may also be unclear as to
whether a green bond's proceeds, intended
to finance new projects, actually get used
that way or have an environmental impact,
the comment says, referring to findings by
the Climate Bonds Initiative. At fault are
the lack of-or, when they exist, relative-
performance standards and the dearth of
results reporting, said S&P Global, which
has observed that proceeds often go to
refinance existing projects.
Regardless, having evaluated all of
the bonds in its database, " [CBI] has ultimately
concluded that greenwashing
overall remains rare as issuers genuinely
Think tank InfluenceMap
assessed 130 funds
named " fossil fuel
reserves free " or
" fossil fuel screened "
and found they
collectively held
$153 million in shares of
either oil company or oil
service company stocks.
Source: Financial Times
finance green projects and assets, " the
comment said.
Sustainable, social and transition
bonds, newer to the market than green
bonds, have similar limitations and challenges,
evoking the same heightened
concerns about " washing, " the firm said.
In " social-washing, " investors suspect
an issuer of " overstating the social impact
of its financial projects without adding
social benefits, " it explained, adding
that social impact is less definite than
environmental and therefore harder to
measure. Bond issuers are more apt to look
at " dollars spent, loans issued, number
of participants or hospital beds added, "
which bypasses the essential human
component in how much social outcomes
were improved.
Summing up, S&P Global credited
investor scrutiny for the progress made
in advancing " the transparency, robustness
and
credibility
of
sustainability
commitments. "
" It's becoming clear that entities can
no longer simply state their sustainability
goals or long-term targets, " the
firm continued. " Stakeholders want to see
companies produce detailed transition
action plans, backed by data and shorterterm
interim targets, which demonstrate
strong commitments toward a more
sustainable future. "
S&P Global pointed to work underway,
much of it in Europe and voluntary, to bring
uniformity, clarity and accountability to
the ESG market. -Karen Wittwer
➜ The Investment
Adviser Association
entered a strategic
partnership with ACA
Group, a governance, risk
and compliance adviser
in financial services.
➜ Brian Collins joined
Hub International as
chief investment officer
of Hub Retirement and
Private Wealth (HUB
RPW). He will work on
Hub RPW's investment
platforms.
➜ GTCR LLC and
Reverence Capital
Partners L.P. will
be rebranded as
Allspring Global
Investments,
upon closing of
their acquisition
of Wells Fargo Asset
Management (WFAM).
➜ Morgan Stanley is
partnering with Empower
Retirement, expanding
the former's ability to
serve adviser-sold plans
of under $50 million in
assets. Morgan Stanley
at Work also announced
" a retirement partnership "
with Vestwell.
➜ PGIM appointed
Linda Gibson as CEO
of its quantitative equity
and multi-asset solutions
specialist, QMA. Gibson
has been with QMA
since July 2019 as chief
business officer.
planadviser.com September-October 2021 | 17
➜
http://www.planadviser.com
PLANADVISER - September/October 2021

Table of Contents for the Digital Edition of PLANADVISER - September/October 2021
