Climate change, diversity and systemic inequalities at the top of the ESG agenda in 2020
Posted 16 hours ago
Proposed by T. Rowe Price
The coronavirus pandemic, escalating attacks on people of color, and rising activism against racism and income inequality have heightened attention to ESG issues by businesses, investors and others stakeholders in 2020
T. Rowe Price’s third annual ESG report also finds that business leaders, once resistant to ESG trends, now see addressing them and providing adequate disclosure and transparency to attract and retain the best. talents.
The $ 1.5 trillion global asset manager sees the need to improve and expand environmental and social disclosure, regulation and data integrity and works with its recipient companies, industry groups, organizations global regulators and other stakeholders to encourage further progress.
May 20, 2021 / CSRwire / – The landscape of global businesses and their role in environmental, social and governance (ESG) issues have experienced a tectonic shift in 2020 that will likely reverberate for decades to come. The deadliest global pandemic in a century, accelerating evidence of global warming and a backlash against racial and systemic income inequalities have prompted businesses and society at large to recognize these challenges and address other ESG challenges.
In his third ESG annual report, T. Rowe Price stresses the need to improve the information provided by companies and asset managers on ESG issues. As regulators around the world rally to fill the disclosure void, the company is urging more comprehensive, clear and globally aligned regulation. If different regulatory regimes are in place in each country, ESG disclosure requirements for asset managers may not match those required of underlying companies in their portfolios. Uneven levels of disclosure could ultimately distort the image of a portfolio’s ESG characteristics, the company notes.
T. Rowe Price guides its owned companies towards industry best practice disclosure standards and advocates alignment with the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD), two frameworks globally recognized that focus on financial materiality. T. Rowe Price also actively encourages recipient companies to disclose their greenhouse gas emissions (including significant Scope 3 emissions) and diversity data as a best practice.
The firm believes that to fight climate change, a fundamental change is needed in the relationship between the economy and the environment. While financial markets and industry players are well positioned to play a leading role, regulation must be implemented globally to achieve meaningful progress. The company actively participates in industry efforts with regulators around the world to develop ESG disclosure rules that are useful and relevant to decisions.
While markets have anticipated the impact of some legislation on climate change, namely in certain sectors directly affected by the transition from fossil fuels to renewable energy sources, the company does not yet see widespread evidence that the The potential impact is recognized across the economy. However, as new regulations and laws come into effect around the world, T. Rowe Price expects the link between a company’s financial performance and its climate change track record to grow stronger. in addition to the global economy.
T. Rowe Price’s ESG investment capabilities
In 2020, T. Rowe Price focused on continuously expanding its ESG investment capabilities and improving ESG data integrity, both for its recipient companies and for the company itself. . The company has expanded its dedicated ESG research team, which now includes 17 investment professionals, as well as the technology and operational teams that support them.
T. Rowe Price continued to integrate ESG into its basic research platform. The company’s proprietary Responsible Investment Indicator (RIIM) model provides ESG data on metrics such as carbon footprint, board and employee diversity, and product sustainability to portfolio managers and to analysts on their desktops and mobile devices. The RIIM model now covers around 15,000 companies (stocks and bonds) and 200 sovereign debt issuers. Last year, the company extended its RIIM analysis to include municipal and securitized bond issuers. T. Rowe Price’s investment professionals use this data to inform their investment theses, safety ratings, proxy voting decisions, corporate engagements, and more.
In January 2020, the company launched its range of socially responsible funds in Europe and earlier this year expanded the range with a responsible equity fund for UK clients. These products allow clients to exclude certain investments from their portfolios. In March 2021, the company launched its first impact strategy in the United States, enabling investors to pursue both financial gains and their environmental and social equity goals. Over time, the company plans to introduce more investment choices like this around the world in various vehicles suitable for clients in each region.
Despite the pandemic and its travel restrictions, the firm hosted more than 1,000 company meetings focused on ESG issues, an increase of more than 50% from 656 meetings the previous year.
As the graph shows, the main topics covered included environmental and social data disclosure, employee and board diversity, greenhouse gas emissions, product sustainability, and treatment of employees.
Rob Sharps, Chairman of T. Rowe Price, Chief Investment Officer and Group Chief Investment Officer
“The year 2020 was another dynamic on the ESG front for T. Rowe Price. The continued expansion of our ESG investment capabilities and the focus on improving the integrity of ESG data were our primary goals. We remain committed to working with our recipient companies to improve the quantity and quality of ESG data for our research and analysis, thereby contributing to better long-term investment decision making for our clients. We are also committed to ensuring transparency on the investment objectives of our own strategies and their ESG characteristics. “
Donna Anderson, T. Rowe Price Head of Corporate Governance
“Our long-standing focus on Diversity, Equity and Inclusion (DCI) has been amplified in the wake of the global wave of protests and activism against systemic racial inequality. For many of the companies in our portfolios, DCI suddenly rose to the top of management’s priority lists due to a strong mandate from their employees to accelerate the pace of progress.
“The levels of corporate disclosure regarding DCI issues at the end of 2019 were not impressive. Even for S & P’s US equity universe, the level of disclosure about gender diversity within management and the workforce in general was only 38% and 62%, respectively. The availability of data on ethnic diversity was even worse, at only 12% and 24%, respectively. Encouragingly, we believe the trends are improving, as dozens of leading U.S. companies have already agreed to respond to investor requests for more detailed information on diversity. “
Maria Drew, T. Rowe Price Director of Research, Responsible Investment
“The impact of climate change presents a systemic investment risk, which makes the importance of the environmental footprint of an investment more critical than ever. There has been a long-standing mismatch between politics and science when it comes to climate change, but over the past 12 months we have started to see significant movement to close that gap.
“The pandemic has been a high-impact vehicle for world leaders and society at large to understand how closely economic outcomes are linked to the prosperity of the planet and its people. In the years leading up to the pandemic, ESG investing had already seen a remarkable rise, with critics often putting it at odds with financial goals. Interestingly, the onset of one of the most economically disruptive events in history acted as a new catalyst for the consideration of environmental, social and governance factors in the process of investment. “
ABOUT THE T.ROWE AWARD
Founded in 1937, Baltimore-based T. Rowe Price Group, Inc. is a global investment management organization with $ 1.59 trillion in assets under management as of April 30, 2021. The organization provides a broad range of mixed funds, sub-advisory services, separate account management and related services for advisers, institutions, financial intermediaries and pension plan sponsors. The company also offers sophisticated investment planning and guidance tools. T. Rowe Price’s disciplined and risk-sensitive investment approach focuses on diversification, style consistency and fundamental research. For more information, visit trowe inconnu.
T. Rowe Price
T. Rowe Price
Founded in 1937, Baltimore-based T. Rowe Price is a global investment management organization. The organization offers a wide range of mutual funds, sub-advisory and separate account management services for individual and institutional investors, pension plans and financial intermediaries. The company also offers a variety of sophisticated investment planning and guidance tools. T. Rowe Price’s disciplined and risk-sensitive investment approach focuses on diversification, style consistency and fundamental research.
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