|Bid||533.43 x 1400|
|Ask||545.00 x 800|
|Day's Range||533.23 - 539.20|
|52 Week Range||401.80 - 539.20|
|Beta (5Y Monthly)||1.55|
|PE Ratio (TTM)||18.83|
|Forward Dividend & Yield||13.20 (2.47%)|
|Ex-Dividend Date||Dec 03, 2019|
|1y Target Est||N/A|
MSCI is out with a new report on the top ESG trends to watch in 2020, which includes topics like the climate crisis and future of real estate. MSCI Global Head of ESG Research Linda-Eling Lee joins Yahoo Finance’s Seana Smith on The Ticker to discuss.
The World Economic Forum's new annual "Global Risks Report" named climate change the biggest global threat over the next decade. Managing Director at ETF.com Cinthia Murphy joins Seana Smith on The Ticker to discuss ESG funds investors can add to their portfolios.
BlackRock chief Larry Fink has warned that the world’s largest asset manager will take a “harsh view” of companies that fail to provide hard data on the risks they face from climate change. As part of his annual missive to chief executives last week, Mr Fink said the $7tn asset manager had spent “several years” talking to companies about their preparations to report on the risks and opportunities they faced from global warming. In the letter, Mr Fink said that by the end of the year he wanted all companies to “disclose in line with industry-specific” guidelines set out by the SASB — the Sustainability Accounting Standards Board, a non-profit organisation that sets voluntary financial reporting standards.
(Bloomberg Opinion) -- BlackRock Inc., the world’s largest asset manager, says it will cut exposure to companies linked to thermal coal, among other climate-friendly measures. It’s a powerful signal. Unfortunately, it only scratches the surface. If BlackRock CEO Larry Fink is serious about helping to eliminate coal while reshaping finance, his outfit can use its holdings of sovereign debt to tackle governments, too.Coal power generation has fallen steeply in Europe and the U.S. in the past year or so, thanks to cheap natural gas, higher carbon prices and green pressure. Yet in Asia, once you iron out some local peculiarities, demand for the black stuff remains remarkably resilient. That suggests that even if global appetite peaks soon, as most analysts estimate, it could well remain at high levels for years to come. Analysts at UBS Group AG estimated last July that on current trends the last coal-fired power station may close only in 2079. To blame are the likes of China, India and Vietnam. Their fleet is young, still growing and often state-backed; Western money managers selling out of public securities won’t change that. There is good news. BlackRock is an investment giant, with $7.4 trillion of assets under management, so Fink’s call to arms last week marks a significant move. Cutting off funds for coal producers and driving up their cost of capital is key to suffocating a sector that is the single largest cause of increased global temperatures.BlackRock’s strategic shift is also driven by self-interest. That’s encouraging, as such initiatives tend to outlast moral outrage. Heat from activists, like the BlackRock’s Big Problem campaign, helped, but Fink argues he is making sustainability the new standard because it makes financial sense. The surge of inflows into the firm’s environmentally friendly funds last week will encourage that view.The devil, as ever, is in the detail. BlackRock’s aim to divest thermal coal equity and debt will apply to its actively managed funds. Yet those amount to only under a third of the money it manages. As worrying is the threshold to be used to determine what has to go: The fund manager will sell out of any company where 25% of revenue or more is derived from thermal coal. That gets at narrowly focused producers like Australia’s Whitehaven Coal Ltd., but leaves untouched stakes in diversified heavyweights, like BlackRock’s 6% holding in Glencore Plc, the world’s top producer of seaborne thermal coal, or other sprawling conglomerates. It also tackles primarily miners, not utilities that consume the fuel.It’s possible to aim higher: Axa SA last year vowed to reduce its exposure to the thermal coal industry to zero by 2040.The bigger problem is that while such moves are necessary, they aren’t sufficient. That’s firstly because of the haven offered by private markets. If a large investment fund divests a stock or bond, or pressures companies into selling out of coal projects, what next? BlackRock investors may feel better, but will global production reduce overall? Quite possibly not. Will the world be greener? Also, possibly not, if the pit is sold to owners out of the public eye. Arguably, it may become harder to monitor. That suggests a more effective pressure point is demand, and that means tackling governments and state-backed firms still funding and supporting the fuel. Indeed, real impact will require a change in policy in Asian markets like Vietnam where coal is still a major employer and seen as a driver of economic growth. As a major investor in sovereign debt, even if much of it is in passive funds, BlackRock has enough leverage for meaningful dialogue at least.The challenge is significant. Consider China, which wants to reduce its reliance on coal. At least 200 million tons of coal capacity were ready to start production in 2019, while another 409 million tons of government-approved capacity are under construction, according to Bloomberg Intelligence numbers published last September. Together, that’s almost a quarter of China's up-and-running thermal coal capacity. In Indonesia, coal consumption may grow at the world’s fastest pace. Earlier this month, Jakarta ordered coal miners to slash production after record output last year. Prices immediately turned higher.Policy, then, is the lever to significantly reduce coal use in the region where it’s still growing: Asia. Go back to the UBS numbers. On current trends, the last coal-fired power station closes in six decades. But a red alert scenario where leaders accelerate closures would shutter the last plant in 2058, according to the bank, closer to the 2050 target set by the Intergovernmental Panel on Climate Change.Indonesia’s tussle with JPMorgan Chase & Co. in 2017 — when Jakarta temporarily severed business ties over a negative research report — is a reminder of just how much emerging market governments care about perception. BlackRock can make that count. To contact the author of this story: Clara Ferreira Marques at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The last place on earth where bankers and traders can make real money is opening up. As part of its trade deal with the U.S., China vowed to grant Western financial institutions more access to its $14 trillion wealth-management industry. A number of foreign-controlled joint ventures with banks are in the works. Days before Christmas, Beijing approved the first one, a tie-up between Amundi Asset Management and a unit of Bank of China Ltd. Shortly afterward, China Construction Bank Corp. agreed to partner with BlackRock Inc. and Temasek Holdings Pte, while Industrial & Commercial Bank of China is flirting with Goldman Sachs Group Inc.Millions of dollars are being thrown at this. JPMorgan Chase & Co. and Nomura Holdings Inc. are buying up extra office space in Shanghai, where staff could be paid more generously than in Hong Kong. Goldman plans to double its headcount in China to 600 over the next five years. But why would foreigners want to crowd into the world’s most competitive market? Simple: Investors in China still have faith in active managers. Last year, it took just 10 hours for a star stock picker to attract more than $10 billion in orders for his firm’s debut mutual fund.Foreign firms might reason that they have deep talent pools, too. Bin Shi, a portfolio manager who has been with UBS Group AG since 2006, can churn out profit better than many of his mainland competitors. His Luxembourg-registered All China Fund returned 50% over the past year. By tapping into local banks’ distribution networks, Western asset managers could benefit from the army of retail investors that might come crowding in.If allowed to compete, Wall Street managers could almost effortlessly bat local competitors away. After all, Beijing wants Chinese wealth managers to emulate the U.S. model. In the West, middle-class savers have built up their nest eggs with mutual funds. They get some sense of their risk-return trade-off by checking (sometimes obsessively) the charts and numbers that showcase the historical ups-and-downs of their fortunes.Not so in China. Two years after the government unveiled sweeping rule changes, many products still carry the false perception of guaranteed future returns. It’s not uncommon for money managers to post these forecasts on their websites weekly. The concept of metrics like net asset value remain completely foreign to a money manager sitting in a Chinese bank branch. In that sense, Western competitors are miles ahead.Then consider the options. If Chinese savers looked at BlackRock’s range of offerings, for example, they’d be blown away. Some funds are designed to help you retire by 2040, while others are more tactical in nature. Blending bonds with stocks in a portfolio is commonplace, and financial metrics such as the Sharpe Ratio or effective duration for fixed income funds are readily available for savers to peruse, if they decide to get a bit technical.In China, investments that can deliver steady, stable gains are rare. Moms-and-pops are stuck with either bank deposits, which are essentially subsidies to the state-owned banks, wealth management products — nowadays pretty boring, thanks to Beijing’s sweeping rule changes to limit risk — or speculative private funds that can cost you dearly.To Beijing’s credit, foreigners have a fairly level playing field in the asset-management business. The new rules, which require banks to spin off their wealth units, are re-drawing the landscape entirely. The first such operation opened for business just six months ago, and there are now about half a dozen. It wasn’t until early December that the government even finalized net capital rules for these operations. So assuming the likes of Goldman and BlackRock can get their licenses quickly, their peers won’t be that far behind. That’s quite a positive step for a country that actively blocks Alphabet Inc.’s Google and Facebook Inc. to allow its domestic players flourish.Of course, we all know the realities of marriage: Whether a partnership yields happiness is anyone's guess. But that shouldn't discourage Western asset managers from trying. There's plenty of money to be made.To contact the author of this story: Shuli Ren at email@example.comTo contact the editor responsible for this story: Rachel Rosenthal at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
More than three years ago, BlackRock, the world’s largest fund manager, published a paper promising to take more account of climate risks when investing in companies. “Investors can no longer ignore climate change,” the 16-page report observed. Last week, under pressure to practice more vigorously what it preached, the fund manager’s chief executive announced a series of measures designed to show it was following through on its commitment.
Investor pressure on fossil fuel producers as well as users has been increasing dramatically of late, and BlackRock, the world’s largest money manager could no longer afford to ignore this trend
The BlackRock CEO says that “ESG will be one of the key lenses for how investors look at everything, from corporate to country to municipal.”
There's nothing particularly wrong with mutual funds. The investing structure has been a tried-and-true portfolio element for decades and has allowed plenty of individual investors to grow their wealth, gain diversification benefits and save for the future. And there are certainly plenty of good mutual funds out there. But these days, there is something better -- exchange-traded funds.So, there is a real reason why exchange-traded funds have taken the world by storm. Featuring rock-bottom fees, similar diversification benefits and even some hefty tax savings, low-cost ETFs are simply a better choice for many investors. And now with the elimination of trading fees at many major brokerages, dollar-cost averaging into low-cost ETFs is even easier.To that end, investors in some popular mutual funds could be better suited making the switch into ETFs. For investors in tax-deferred or tax-free accounts, the switch is easy. For investors in taxable accounts, you need to weigh the potential hit from the switch. However, in spite of that, the longer-term picture could justify selling your mutual funds and buying a low-cost ETF.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Small-Cap Stocks That Are Not Worth a Second Glance With that, here are some of the most popular and common mutual funds held by investors and great ETFs to replace them with. SPDR DoubleLine Total Return Tactical ETF (TOTL)Replaces: PIMCO Total Return (PTTRX)Expense Ratio: 0.65%, or $65 on a $10,000 investment.For investors looking at low-cost ETFs, switching out one former bond king for another may be a good idea. When Bill Gross was at the helm of the PIMCO Total Return (MUTF:PTTRX), the go-anywhere bond fund was one of the largest in the world, returns were great and the mutual fund was found in nearly every 401k plan. However, since Gross left, PTTRX has begun to sputter. There's been a few management changes and assets have bled lower. These days, PTTRX is a shell of its former self.And that's why the SPDR DoubleLine Total Return Tactical ETF (NYSEARCA:TOTL) is a wonderful replacement.TOTL is run by new bond king Jeff Gundlach. And like PTTRX, TOTL is considered a multi-sector bond fund. Gundlach is able to buy mortgage-backed securities, Treasury debt, bank loans, commercial mortgage securities, investment-grade corporate bonds and even emerging market debt. The beauty is that TOTL has a svelte $3.4 billion in assets compared to PTTRX's nearly $68 billion. This allows Gundlach to be pretty nimble and make smaller bets that pay off big. The results are beating PTTRX's returns over the last three years. Moreover, TOTL comes without sales loads and a low expense ratio of 0.65% or $65 per $10,000 investment.All in all, investors holding PTTRX may be better suited swapping out for the smaller and better-performing rival. Vanguard Dividend Appreciation ETF (VIG)Replaces: Vanguard Equity Income Fund Admiral Shares (VEIRX)Expense Ratio: 0.06%Low-cost ETFs to buy can provide a better return in many instances versus actively managed funds with similar strategies. Case in point, the Vanguard Equity Income Fund Admiral Shares (MUTF:VEIRX). VEIRX offers investors a way to play dividend stocks and the income they generate. The fund is managed by both Wellington Management and Vanguard's Quantitative Equity Group. The two use slightly different methods. But the general idea is to buy strong dividend-paying stocks with plenty of quality behind them. And the fund has been great for investors -- netting a 13% average annual return over the last five years.But how would you like get a more than a full percentage point per year in return? Swapping out VEIRX for the indexed Vanguard Dividend Appreciation ETF (NYSEARCA:VIG) can make that happen. VIG follows those stocks that have long histories of increasing their dividends every year. This strategy provides a way for investors to grow their income potential and benefit from great long-term returns. VIG still throws off plenty of dividend income. The best part is that the ETF has managed to outperform the actively managed mutual fund by a decent margin.The reason? Expenses. As one of the lowest-cost ETFs to buy on the market, VIG's cheap 0.06% expense ratio creates zero drag on returns. Also creating zero drag is the fact that the mutual fund needs to hold some cash for investor redemptions. The combo creates a slightly better return for a similar strategy. * 10 Cheap Stocks to Buy Under $10 In this case, investors looking for dividend income would do well to swap out VEIRX for VIG. In the end, the exchange-traded fund's total returns are better. iShares Core S&P 500 ETF (IVV)Replaces: iShares S&P 500 Index Fund (BSPAX)Expense Ratio: 0.04%Index funds are great. Expensive index funds are not so great. And sometimes, it's the same asset manager that's pulling the wool over investors' eyes. A prime example is the iShares S&P 500 Index Fund (MUTF:BSPAX).Despite having the "iShares" name, BSPAX is a mutual fund. A few years ago, BlackRock (NYSE:BLK) rebranded all its index funds under the banner. And there is nothing wrong with BSPAX. It tracks the bread-and-butter S&P 500 and is found in many 401k plans as the broad index option. So, it's easy to see why all share classes of the fund have more than $22 billion in assets. The problem for BSPAX and other share classes is that there literally is a cheaper, identical version of the fund from BlackRock -- the iShares Core S&P 500 ETF (NYSEARCA:IVV).Both IVV and BSPAX track exactly the same basket of stocks. The difference is that the mutual fund charges 0.35% in annual fees. IVV only charges 0.04%. Since they are identical, IVV will always outperform BSPAX. This outperformance grows when you factor in that some share classes of the mutual fund charge front-end loads and require certain cash holdings. Because of this, there is almost zero reason to hold BSPAX if you can make the switch. Over the longer haul, IVV will provide a better return for holding literally the same basket of stocks.So even among index funds within the same asset manager, low-cost ETFs are often the better choice for portfolios. At the time of this writing, Aaron Levitt did not hold any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The Top 5 Dow Jones Stocks to Buy for 2020 * 7 Fintech ETFs to Buy Now for Fabulous Financial Exposure * 3 Tech Stocks to Play Ahead of Earnings The post 3 ETFs to Buy Instead of Popular Mutual Funds appeared first on InvestorPlace.
(Bloomberg Opinion) -- A quick reader’s note on some exciting news: Starting next week, Sparklines becomes part of a new daily climate newsletter from Bloomberg. You’ll get the latest on critical scientific, financial and technological developments all week long, including Sparklines every Thursday. You can unsubscribe at any point or modify your email preferences on your account page.This week, BlackRock Inc. Chief Executive Officer Larry Fink published two letters — one to CEOs, one to BlackRock clients — outlining the asset manager’s environmental, social and governance priorities for 2020 and beyond. To say the letters’ import is significant doesn’t nearly do it justice. On Wednesday, I attended a conference of energy CEOs, executive board members, institutional investors and proxy advisors, and Fink’s letters were mentioned multiple times in every session. A wave of disclosure of climate change risks is coming in force, and with it, a wave of physical and financial asset allocation decisions. One sector, already on notice, will feel that wave breaking first: coal.In his letter to clients, Fink said BlackRock is “in the process of removing from our discretionary active investment portfolios the public securities (both debt and equity) of companies that generate more than 25% of their revenues from thermal coal production, which we aim to accomplish by the middle of 2020.” The parameters he lays out aren’t completely new; insurance firms have placed similar restrictions on coal lending and underwriting, which I wrote about last year.In the U.S., the move away from coal was well underway before the $7 trillion asset manager announced its restrictions. Companies have been shutting down coal-fired power plants and setting “transformative responsible energy plans” removing coal from the mix completely, even in the absence of robust federal policies. U.S. coal consumption in power generation fell below 600 million tons last year. This year, the U.S. Energy Information Administration expects it to fall much further still, below 500 million tons. That’s not only down by more than 50% since 2007, but it would also put coal consumption back to 1978 levels.That decline is thanks to a massive number of plant retirements, now totaling more than 300 since 2010. The U.S. coal fleet has not had any net capacity additions since 2011. 2015 is the most significant year for coal retirements to date, as a suite of Obama-era air quality standards took effect. 2018 wasn’t far behind, however, and 2019 wasn’t far behind 2018.The base effect of a smaller number of operational coal plants also means that consumption is declining at an accelerating rate. Using the EIA’s projection for 2020 coal burn in the power sector, year-on-year consumption will decline nearly 15%, the most since at least 1950.Coal’s decline doesn’t exist in isolation. Most coal in the U.S. travels from mine to plant by rail, so there’s a predictable impact on rail cargoes. A decade ago, U.S. rail carriers shipped nearly 7 million carloads of coal. Last year, that figure was barely 4 million.Rail shipments in other sectors have grown. Total rail carloads are up about about 50 percent since 2001, and chemical carloads are up slightly. Oil carloads, thanks to soaring production in the Bakken formation of North Dakota as well as a significant shortage of pipeline capacity, were up more than 250% by mid-2015 and are now soaring back up after plunging along with oil prices. Coal’s path is negative and, given planned power generation retirements, might never move back up.It wasn’t only the restrictions on coal investment, or what sectors might be restricted next, that people were talking about this week. BlackRock’s call to publish disclosures align with Sustainability Accounting Standards Board and Taskforce on Climate-Related Financial Disclosures guidelines, including companies’ plans for operating in a world where the Paris Agreement’s climate goals are fully met. It’s not just coal that is on notice, or just the power sector, or just energy. It’s every big business, everywhere. BlackRock’s position on coal is set, but it could be a playbook for a wave of more restrictions and disclosures to come. The coal sector is the first to feel this breaking wave. Other sectors no doubt will, too.Finally, a note to readers. For more than two years, I’ve had the great pleasure to write this newsletter for Bloomberg Opinion. Next week, I’ll move to become part of a new daily newsletter series and will be publishing on Thursdays. My thanks to you for reading, and I hope you’ll continue to do so on Thursdays, too. A special thanks is due to my Opinion editor Brooke Sample, too, without whom I could quite literally not have been able to write for you all.To contact the author of this story: Nathaniel Bullard at email@example.comTo contact the editor responsible for this story: Brooke Sample at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Nathaniel Bullard is a BloombergNEF energy analyst, covering technology and business model innovation and system-wide resource transitions.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
BARRON'S TAKE (STT) stock is surging this morning after beating Wall Street estimates. Shares of State Street (ticker: STT) are up more than 4% Friday morning. The stock is up 19% from Jan. 17, 2019 through yesterday’s close, compared with the S&P 500’s 29% rise, including dividends, over the same period.
(Bloomberg Opinion) -- This is a big year for the U.S. oil and gas industry. If the past five have constituted a reckoning with the old frack-it-till-you-make-it model, then this one is where we find out if the reckoning stuck.The new mantra espoused by many energy companies is that returns are king. They are. The chart below, which I have adapted from one used by Kimmeridge Energy Management Co., shows the close relationship between return on capital and stock performance. It compares how share prices moved in the five years through the end of 2018 with an implied change in the market cap based on that period’s cumulative economic value added, a measure of value creation or destruction.(1)The sample consists of 55 U.S. oil and gas companies with a market cap of at least $250 million (as it runs through the end of 2018, it includes a couple of companies acquired since then, Anadarko Petroleum Corp. and Carrizo Oil & Gas Inc.).Start with the obvious. There’s a reasonably strong relationship between whether a company has been earning above or below its cost of capital and how well its shares performed in that period(2). Also, the vast majority of the sample — with an aggregate market cap of $1 trillion at the end of 2018 — destroyed value and had the price declines to show for it.More pertinent is that bigger companies — especially refiners — tended to fare better than the cloud of smaller bubbles trailing off to the bottom left of that chart. This gets at a critical issue regarding what comes next for the sector.The past decade’s boom in U.S. oil and gas production owed much to a crowd of relatively small companies competing with each other and backed by enthusiastic capital markets. But as oil has settled into a lower, more volatile range (and gas has fallen into a coma), so the advantages of being bigger have become apparent. Smaller exploration and production companies, in particular, tend to have higher unit costs and lower valuation multiples (i.e., a higher cost of capital; see this).The sector has been structurally devalued versus the wider stock market. Moreover, while average yields on energy junk bonds have come in from December’s peak of almost 10%, they remain above 8%, markedly higher than the 5-7% range that held through much of the past decade.Higher risk premiums mean a higher hurdle to beat than the one the sector largely missed already over the past five years or so. Notwithstanding President Donald Trump’s efforts to reduce regulatory costs, climate concerns are likely to widen those risk premiums further over time.That was the message in BlackRock Inc. CEO Larry Fink’s latest missive on the subject. As I wrote here, even if most of the money BlackRock manages is passive, it can still use that to vote for change in the governance standards prevalent in the sector that have prioritized growth above all and protected incumbent management teams. And based on data compiled by Bloomberg, BlackRock holds roughly $25 billion worth across more than 100 U.S. E&P firms, adding up to an average stake of 7% (albeit ranging from virtually zero for some stocks all the way up to 15%).With capital costlier than it used to be, the imperative for smaller companies in particular to consolidate and jettison the cost burden that comes with maintaining separate identities (and management and campuses and accounting and ...) is getting ever stronger. Two decades ago, the supermajors were created in response to a structural change in the investment landscape for oil and gas. We are at that point again, only at the opposite end of the scale.\-- With assistance from Elaine He and Denise Cochran(1) Economic value added values are pulled from the Bloomberg Terminal. They are calculated by multiplying invested capital by the spread between return on capital employed and weighted average cost of capital, with a positive value indicating value creation and negative indicating destruction. I then compare the cumulative figure with each company's market cap at the end of 2018 to get an implied percentage of value that was either created or destroyed. Data run for the five years through 2018 as that is the last year of complete annual economic value added figures.(2) The correlation coefficient is 0.74; coefficient of determination is 0.55.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Moody's Investors Service ("Moody's") assigned an Aa3 rating to BlackRock, Inc.'s (BlackRock) new senior unsecured notes due April 2030. The offering is a takedown from a multiple seniority shelf registration statement of BlackRock, which was automatically declared effective by the Securities Exchange Commission on 27 April 2018. BlackRock's outlook is stable.
The race for the next $1 billion travel technology company is on. Hotel tech startup SiteMinder has just received an investment that placed a more than $750 million ($1.1 billion Australian) valuation on it. BlackRock, the world’s biggest money manager, led the round in the Sydney-based startup, which helps hoteliers get guests online. The companies […]
Lawrence Elbaum, Partner and Co-Leader of Shareholder Activism at Vinson & Elkins LLP When it comes to environmental, social, and governance (ESG) concerns, activist investors tend to focus much more on the “G” than the “E” or “S” – and only after they have found an economic thesis for increasing shareholder value. Looking ahead, activists […]
(Bloomberg) -- Microsoft Corp. unveiled plans to invest $1 billion to back companies and organizations working on technologies to remove or reduce carbon from the earth’s atmosphere, saying efforts to merely emit less carbon aren’t enough to prevent catastrophic climate change.The company’s Climate Innovation Fund will provide money over the next four years for equity investments, debt financing and other support for the development of carbon-removal technology. The fund won’t be used for Microsoft's philanthropic efforts on climate, although those will continue separately. The software maker is also pledging to be “carbon negative”, meaning it will remove more carbon than it emits, by 2030. “This is the decade for urgent action for Microsoft and all of us,” Microsoft Chief Executive Officer Satya Nadella said at an event Thursday at the company’s Redmond, Washington, campus.Engineers have devised ways to capture carbon dioxide, either pulling it from the exhaust of smokestacks or sucking it directly from open air. The gas can be stored underground or put to use — for example, it can be incorporated into products such as cement. Because most governments don’t impose a penalty or tax for carbon emissions, there’s currently no monetary incentive for companies to buy the technologies, and developers have struggled to turn them into viable businesses. Most remain stuck at the demonstration stage, building showcase projects that illustrate what could be done, if someone were willing to pay for it.“A billion dollars is a lot and a little at the same time when you think about the investment level that's probably going to be needed,” Microsoft President and Chief Legal Officer Brad Smith said Monday in a meeting with editors in New York previewing the event. It’s not clear what efforts or companies Microsoft will back — it will now start to consider options for deploying the fund. But there are various ideas and efforts already under development. Switzerland's Climeworks, for example, employs a reusable membrane to capture CO2 pulled through machinery by fans. It then sells the concentrated gas, marketing it to beverage companies and plastic makers. Carbon Engineering, based in Canada, uses a chemical reaction to remove carbon dioxide directly from the air, with the gas either stored underground or used to make fuel.Carbon capture, the vacuum cleaner the climate needs: QuickTakeAs it cuts its emissions, Microsoft plans to tackle the amount of carbon it generates and the emissions released into the environment by suppliers and customers. The company said it will use 100% renewable energy for all its buildings and data centers by 2025, and electrify all campus vehicles by 2030. That’s part of Microsoft’s plan to be carbon negative in 10 years, meaning it will remove more carbon from the atmosphere than it emits. Two decades after that, the software maker said it will have removed from the environment all the carbon it has emitted either directly or by electrical consumption since its founding in 1975.Some companies and local governments have been stepping up action on the environment, following the U.S. withdrawal from the Paris climate accord and amid rising concern about the pace of climate change. Companies like Microsoft and Amazon.com Inc. are also under pressure from employees to do more, with Amazon facing vocal protests from a group called Amazon Employees for Climate Justice. In September, Amazon announced what it called the Climate Pledge, a commitment to meet the goals of the Paris agreement 10 years early, and invited other companies to sign on. Microsoft last year joined the Climate Leadership Council to advocate for a carbon tax. And on Jan. 14, BlackRock Inc. Chief Executive Officer Larry Fink said climate change is “almost invariably the top issue that clients around the world raise with BlackRock.” Microsoft co-founder and board member Bill Gates is increasingly focusing on climate issues and plans a book on the topic later this year.Microsoft and Amazon, along with other technology companies, have also been criticized for supplying software and cloud services to large oil and gas companies like Chevron Corp. and BP Plc. BlackRock’s Fink has been trailed to work and public engagements by protesters decrying the investment firm for inaction on global warming and other issues. Greenpeace praised Microsoft for its pledge Thursday, but said the software maker needs to do more.“While there is a lot to celebrate in Microsoft’s announcement, a gaping hole remains unaddressed: Microsoft’s expanding efforts to help fossil fuel companies drill more oil and gas with machine-learning and other AI technologies,” Greenpeace’s Elizabeth Jardim said in an emailed statement. “To truly become carbon negative, Microsoft must end its AI contracts with Big Oil.”Part of Microsoft’s announcement Thursday addresses the actions of customers, and the company will begin a plan to have clients and suppliers use Microsoft technology to reduce their own carbon footprints. Starting next year, Microsoft will make carbon reduction part of its procurement deals. The company is announcing an Azure Sustainability Calculator that lets cloud customers look at their own carbon output and shows the benefits of moving to the cloud from in-house server farms—a shift that could benefit Microsoft’s Azure business."Microsoft is at the helm of what could be a new movement towards negative emissions; it’s a big step beyond what most companies have committed to. But to really shift the needle on climate change, we need 1,000 other Microsofts to follow-suit and turn rhetoric into action," the Environmental Defense Fund said in a statement.The company said it intends to take action on several types of emissions, including direct and electrical and heat use, but also the indirect carbon emissions that come from things like manufacturing, materials in its buildings and the electricity consumers use when deploying Microsoft products. At Microsoft, that indirect category is about three times the others combined. While the company said it has been “carbon neutral” since 2012, “our recent work has led us to conclude that this is an area where we’re far better served by humility than pride. And we believe this is true not only for ourselves, but for every business and organization on the planet,” Smith wrote in a blog post announcing the plans. Microsoft accomplished carbon neutrality, like most companies, by reducing and avoiding emissions, Smith said, but that’s no longer enough.“We will not solve this problem by doing nothing,” Smith said. (Updates with comments from Greenpeace in 10th paragraph.)\--With assistance from David R Baker and Max Chafkin.To contact the author of this story: Dina Bass in Seattle at email@example.comTo contact the editor responsible for this story: Jillian Ward at firstname.lastname@example.org, Andrew PollackFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Larry Fink’s commitment to tackling the climate crisis already seems to be a boon for his firm’s environmentally-friendly funds.BlackRock Inc.’s iShares ESG MSCI USA ETF, ticker ESGU, had its biggest-ever inflow on Wednesday, totaling $1.15 billion, according to data compiled by Bloomberg. Meanwhile, a sibling fund -- the $964 million iShares ESG MSCI EM ETF -- had a record day of trading, with more than $785 million shares changing hands. This could translate to further flows in due course.Increased attention to the ESG sector comes after Fink warned that climate change could upend global finance in his annual letter to corporate executives. As a result, BlackRock plans to integrate sustainability criteria into portfolio construction and risk management, exit investments with high risks from ESG-related issues, and launch new products that screen out fossil fuels.“Obviously a lot of people are concerned over climate change and how companies do what they do, and BlackRock is starting to lead forward what the consumer wants,” said Ryan Detrick, senior market strategist at LPL Financial. “It’s still a very untapped market, and it’s one of those trends that doesn’t seem like it’s going to fade out anytime soon.”ESGU’s cash injection prompted a massive spike in the fund’s assets. After taking in $1.18 billion over the course of 2019, the fund grew 77% overnight and now oversees $2.7 billion.But the fund may soon have increased competition. BlackRock plans to double its lineup of sustainable ETFs to about 150 to help meet its new climate commitments, and will lobby benchmark providers to create sustainable versions of their flagship gauges for these funds to track.That’s because indexers, like MSCI Inc., ultimately determine which companies are included in passive funds, and BlackRock holds more than two-thirds of its $7.4 trillion of assets in products linked to indexes.Investments in ESG and value-based ETFs surged in 2019, reaching $94 billion of assets globally, double 2018’s level. Cost seemed to be a key determinant for these investors, with almost 70% of flows going to products charging $2 or less for every $1,000 invested.“It’s here to stay, it’s not a passing fancy,” Chris Gaffney, president of world markets at TIAA, said of ESG investing. “It’s increasing in popularity right now with both consumers and institutions.”\--With assistance from Tom Lagerman and Vildana Hajric.To contact the reporter on this story: Claire Ballentine in New York at email@example.comTo contact the editors responsible for this story: Jeremy Herron at firstname.lastname@example.org, Rachel Evans, Rita NazarethFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Financial Services companies flourished despite a low-rate environment and remarkably outperformed analysts' estimates in fourth-quarter 2019.
In a newly released interview, longtime environmental advocate and lawyer Robert Kennedy Jr. sounds the alarm about the climate crisis.
(Bloomberg Opinion) -- If you need some clarity around social investing, don’t look to the world’s biggest money manager for help. Larry Fink, chief executive officer of BlackRock Inc., threw social investing into the spotlight on Tuesday in his annual letter to America’s CEOs. Climate change is an urgent problem, he said, and BlackRock will make it the center of its investment approach by “making sustainability integral to portfolio construction” and exiting investments that contribute to climate change, such as coal producers.That may sound straightforward, but it’s far from it. A key aspect of social investing that is widely misunderstood is that the movement comprises two distinct camps. On one side is socially responsible investing, or SRI, which attempts to align investors’ portfolios with their values by excluding companies and sectors that conflict with those values, regardless of the financial impact to investors. On the other side is ESG, which attempts to identify environmental, social and governance policies that reduce companies’ — and thereby investors’ — exposure to risk. Whereas SRI is concerned with values, ESG is about maximizing wealth. Fink’s letter is rooted in ESG, not SRI. His main point is not that climate change is bad per se — although I have no doubt he believes that — but that it’s a threat to economic growth and prosperity and therefore a threat to companies’ future prospects. “Climate risk is investment risk,” Fink said, and investors are “seeking to understand both the physical risks associated with climate change as well as the ways that climate policy will impact prices, costs, and demand across the entire economy.” That process of identifying the investment risks associated with environmental policies is the very definition of the “E” in ESG.Of course, BlackRock is a money manager, not an investor, so the investment risks associated with climate change are those of its clients rather than its own. “As an asset manager,” Fink opens his letter, “BlackRock invests on behalf of others, and I am writing to you as an advisor and fiduciary to these clients.” But BlackRock can give investors the tools to navigate climate-related risks without a broad overhaul of its investment approach. It already offers a suite of ESG funds. It will also double its lineup of ESG exchange-traded funds and push index providers to create ESG versions of their popular broad market indexes, according to Bloomberg News. So why the larger overhaul of BlackRock’s investment approach? The answer is SRI. BlackRock is facing growing criticism that it’s not doing enough to combat a host of ills, including climate change. Fink stoked that in his letter last year, saying that people are looking to corporate executives to fix social problems that governments are failing to tackle. If investors decide that BlackRock is doing too little to align with their values, they may decide to exclude its products — or even its stock — from their portfolios. That’s the very definition of SRI. That blurring of ESG and SRI is not good for BlackRock or social investing. For BlackRock, where does it end? There are numerous other threats to global growth and prosperity, notably wealth and income inequality. Does BlackRock now have an obligation to place inequality at the center of its investment approach, too, or to divest from companies that pay workers less than a living wage, such as Walmart and Amazon? Fink’s letter invites that expectation, and those who view it as an attempt to correct an ethical failing rather than bolster BlackRock’s investment offering will undoubtedly say it does.As for social investing, funds have had difficulty attracting investors. I have argued previously that one reason is that investors don’t understand what they’re buying. Here, too, BlackRock has contributed to the confusion. Its iShares ESG MSCI USA ETF, for example, both invests in stocks with high ESG scores and excludes tobacco and weapons companies, a mishmash of ESG and SRI. The confusion may be why, despite social investing’s apparent popularity, BlackRock’s ESG-related ETFs are among its smallest. The funds account for just $7.6 billion of the roughly $1.7 trillion invested across BlackRock’s ETFs.Fink should have used his letter to explain the difference between ESG and SRI and to make clear that BlackRock is in the business of giving investors the tools to express their preferences around social investing, not dictate those preferences to them. It would not have pacified BlackRock’s most ardent critics, but it would have gone a long way to curtailing future calls for BlackRock to address other societal ills. Investors are smart to pay attention to the risks unearthed by ESG researchers, including those around climate change, and they have every right to express ethical and moral views with their money. BlackRock is also smart to offer them a variety of social-investing funds to do so. But this sweeping focus on climate change further muddies a desperately confused investing movement. To contact the author of this story: Nir Kaissar at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Nir Kaissar is a Bloomberg Opinion columnist covering the markets. He is the founder of Unison Advisors, an asset management firm. He has worked as a lawyer at Sullivan & Cromwell and a consultant at Ernst & Young. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.