On Our Minds

On Our Minds

Inherent Innovation: Financing Education via Pursuit Bonds

Inherent Foundation helped create and invested in an innovative financing structure called Pursuit Bonds, which are helping provide workforce training to those with great potential and great need via the Pursuit organization. ‘So far, the graduate placement rate exceeds … Read More

The Third Dimension

Over the coming year, global capital markets may face a trio of torpedoes in the water: slowing growth, rising interest rates, and net aggregate withdrawal of liquidity by the world’s major central banks. Value-oriented managers are looking forward to … Read More

SDG Investor Seminar

On December 3, 2018, Tony spoke at the Morgan Stanley SDG Investor Seminar. (The SDGs are the UN’s Sustainable Development Goals.) Tony discussed how Inherent integrates the SDGs into our investment process, primarily using them as a way to … Read More

Despite Headlines, US Climate Policy Advances

Mid-term election results showed that decarbonization remains a second-tier issue for most voters. Initiative 1631, a carbon tax in Washington State was defeated, the second time the Washington electorate voted no on a carbon tax. In addition, Carlos Curbelo, … Read More

Inherent Group Joins Open Letter to New GE CEO

Inherent Group joined a group of investors in signing an open letter, released today, to Mr. Lawrence Culp, the new CEO of General Electric. The letter urges GE to invest more in the development and deployment of clean power … Read More

ESG Can Improve Corporate and Investment Performance

There’s long been a debate about the role of business in society, which I’ll address in a later post. For now, let’s stick with related question of whether it pays for an investor to focus on ESG. There’s a … Read More

Death by Survey

Over the past year we have spoken with dozens of companies about ESG performance and disclosure. Sustainability teams are thinly staffed and overwhelmed by the sheer volume of surveys, requests for information, and the alphabet soup of reporting frameworks … Read More

September 2019

Progress Report: Accelerating Action for a Low-Carbon WorldThe Investor Agenda

The Investor Agenda 2019 Annual Progress Report showcases investor action and progress made on climate change. To date, nearly 1,200 investors have taken action in one or more of the focus areas of The Investor Agenda since its launch in September 2018.  

Decarbonization FactorsGeorge Serafeim, Harvard Business School

This working paper  analyzes how integrating 'decarbonization strategies' into a portfolio can lead to better returns and positive alpha.  

Examining the Macroeconomic Impacts of a Changing Climate

Written Testimony of Alicia Seiger, Managing Director, Stanford Sustainable Finance Initiative. Prepared for the U.S. House of Representatives, Committee on Financial Services, Subcommittee on National Security, International Development and Monetary Policy.

Peabody Scraps $800 Million Bond Amid Investor Pushback on CoalBloomberg

Peabody Energy Corp. scrapped an $800 million junk-bond sale meant to refinance existing debt and pave the way for a joint venture as investors increasingly wary of the prospects for coal producers demanded double the average yield of similar BB rated peers.

August 2019

Inside North Carolina’s Big Effort to Transform Health CareThe New York Times

Case study from North Carolina how value-based care is being implemented at the individual provider level, and some of the issues to be worked through.

Transformative Capital: How Mission-Related Investing Can Deepen Foundations’ ImpactFord Foundation

Ford Foundation lays out its approach to mission-related investing, and makes the point that if all U.S. foundations were to allocate 8% of their assets to MRI investing, together they would have $72 Billion to pressure corporations to broaden their focus from shareholders to include all stakeholders.

Founder’s Grip on WeWork May Be Hard for Investors to StomachReuters

Investors in the upcoming initial public offering of The We Company are being asked to lower their standards for corporate governance beyond what other technology startups have demanded, say securities law experts.

The Last Straw: Will Plastic Become the Next Stranded Asset?MSCI

MSCI analyzes what tighter anti-plastics regulation and negative consumer sentiment could mean for the oil and gas companies producing petrochemicals - the main inputs for plastics. The financial impact could be significant.

June 2019

Research: Actually, Consumers Do Buy Sustainable ProductsHarvard Business Review

Consumers are increasingly focusing on sustainability when making purchasing decisions, according to research by the Center for Sustainable Business at NYU Stern. Their analysis shows that 50% of the growth in sales of consumer packaged goods in the last five years came from purchases of products marketed as 'sustainable'.

Coke and Pepsi want to Sell You Bottled Water without the BottleWall Street Journal

As consumers move away from single-use plastics, Coke and Pepsi are starting to embrace a 'bring your own bottle' business model, particularly on college campuses.

Companies See Climate Change Hitting Their Bottom Lines in the Next 5 YearsThe New York Times

A recent study by CDP, formerly known as the Carbon Disclosure Project, reveals that some of the largest companies in the world expect climate change to pose a trillion dollar financial burden to their businesses. And, many of those effects are expected to be felt within the next five years.

ESG Ratings Face Skepticism Even as Loan-Market Importance GrowsBloomberg

The impact of ESG ratings on companies' cost of capital is on the rise. According to Bloomberg New Energy Finance, $32 Billion in loans are now tied to ESG ratings. That's up from $3 Billion just two years ago. However, the data is still controversial and inconsistent, as the ratings don't necessarily reflect actual performance on ESG metrics.

May 2019

Shareholders Are Getting Serious About Sustainability; The Investor RevolutionHarvard Business Review

A 2017 study reported that companies with the highest ESG ratings outperformed the lowest-rated firms by as much as 40%. In 2018, Bank of America Merrill Lynch observed that "firms with a better ESG record than their peers produced higher three-year returns, were more likely to become high-quality stocks, were less likely to have large price declines, and were less likely to go bankrupt."

Starbucks, Dunkin Race Against Bans, Taxes on Disposable CupsBloomberg

Berkeley, California is requiring coffee shops to charge a 25-cent fee per disposable cup to encourage people to produce less plastic waste.

Yes, eating meat affects the environment, but cows are not killing the climateThe Conversation

Decreasing meat consumption will not have as large an impact on the environment as many believe. Meat production does not generate more greenhouse gases than the transportation sector, and the continuation of meat consumption is necessary to sustain the increasing world population.

The Creeping Capitalist Takeover of Higher EducationHuffPost

The privatization of academic programs leads to an increase in profits, and an increase in inequality among those who can attend college. Online colleges, if not for their high prices, could have lessened inequality within the higher education system.

April 2019

The New Age of Corporate ScandalsThe Economist

Is corporate America more 'scandal-prone' than Europe? An interesting piece by the Economist suggests this is the case, and thus far the 'financial cost' to the companies involved has been limited.

"The total market value of American firms involved in big incidents that have become public since 2016 is $1.54trn. At least 200m consumers have been affected. The figures are only $600bn and under 30m for European firms, including carmakers that faked emissions tests and Nordic banks involved in money-laundering."

Building Out the US Offshore Wind Supply ChainGreen Tech Media

U.S. offshore wind is a $68 million dollar investment opportunity that suppliers are poised to benefit from.

Improving Electric Vehicle EconomicsMcKinsey & Co.

McKinsey offers a 'roadmap' to close the $12,000 electric vehicle profitability gap for car manufacturers.

A Market-Driven Green New Deal? We’d Be UnstoppableThe New York Times

An energy study shows that a business-led transition to renewable energy could sustain an economy with a net cost less than that of business-as-usual.

Big Buildings Hurt the Climate. New York City Hopes to Change ThatThe New York Times

According to a recent report, New York City's buildings are responsible for two thirds of the city's greenhouse gas emissions. In pursuit of the goal to reduce emissions by 40% by 2030, the City Council is attempting to pass legislation placing an emissions cap on many large buildings, including the Empire State Building.

How Big Business Is Hedging Against the ApocalypseThe New York Times

As renewable alternatives become more affordable, large corporations, such as Exxon, are shifting towards them.

March 2019

Xylem Signs First-Of-Its-Kind Revolving Credit Facility that Links Interest Rates with SustainabilityMarketWatch (Source: Xylem)

This is one of the first 'sustainable improvement loans' in the U.S., whereby sustainability performance is tied directly to the cost of capital.  Xylem is a global water technology company.

European Commission to Require Sustainable Investment DisclosureEuropean Commission

The European Parliament and European Union countries agreed in March on sustainable investment disclosure rules for institutional investors, which will require money managers to integrate environmental, social and governance factors into their investment decisions and disclose how they are doing so.

The Economic Significance of Long-Term PlansCECP Strategic Investor Initiative & KKS Advisors

Increasingly, both investors and companies are waking up to the costs and inefficiencies caused by the short-termism of capital markets

Show Us Your Climate Risks, Investors Tell CompaniesThe Wall Street Journal

Companies will face a record number of climate-related shareholder proposals this proxy season.

Do Not Let Company Founders Hide From AccountabilityFinancial Times

Paul Singer of Elliott Management weighs in on the issue of dual share class structures for public companies.

February 2019

Lessons From the Collapse at GEImperial College Business School

The importance of underwriting carbon risk - especially in companies that might not seem to have obvious exposure.

Show Us Your Climate Risks, Investors Tell CompaniesThe Wall Street Journal

Companies will face a record number of climate-related shareholder proposals this proxy season.

Investing in Workers. ‘It’s Not a Dead-End Job Anymore.’The Wall Street Journal

KitchenAid as a case study: How the tight labor market is highlighting the competitive advantage a company can create by investing in its employees and their ongoing education.

The 100 Most Sustainable U.S. CompaniesBarron's

The second annual sustainability ranking of public companies from Barron's.

The World’s Biggest Brands Want You to Refill Your Orange Juice and DeodorantThe Wall Street Journal

As plastic waste piles up, consumer packaged goods companies look to shed the 'branded litter' image for something more wholesome, like the 'milkman'.

January 2019

Beyond the Bottom Line: Should Business Put Purpose Before Profit?Financial Times

An analysis of the growing movement behind looking at more than just companies' financial performance.

Concerns Intensify Over Food Producers’ Impact on EnvironmentFinancial Times

Investors and corporate executives are increasingly paying attention to and acting on the environmental impact of the food and agriculture sector, which accounts for about a quarter of global carbon dioxide emissions.

Investors Should Fire Directors Who Fail to Act on Climate ChangeFinancial Times

This opinion piece provides an overview of shareholder action related to climate change and advocates that shareholders should hold directors to a stronger standard for their actions, or lack thereof, on climate change-related matters.

PG&E May Be the Business World’s Biggest Climate-Change Casualty YetBloomberg

An overview of the impact of climate change on large companies, including PG&E's bankruptcy.

December 2018

The Bond That Could Be Wiped Out by California’s WildfiresThe Wall Street Journal

An overview of the growing catastrophe-bond market and the risks playing out in a bond affected by the recent Camp Fire in California.

Joint Statement Between Institutional Investors on Behalf of Climate Action 100+ and Royal Dutch Shell plc (Shell)Shell

Working with a group of institutional investors convened by Ceres, Shell has committed itself to public net carbon footprint targets, linking such targets to executive compensation, and related goals.

GE Powered the American Century — Then It Burned OutThe Wall Street Journal

A detailed account of the growth and recent challenges of what was once America's biggest company.

Your Apps Know Where You Were Last Night, and They’re Not Keeping It SecretThe New York Times

An overview of the large and growing business of selling location data from mobile phones and apps.

How Socially Responsible Investing Lost Its SoulBloomberg Businessweek

The author alleges that many investors are at best confused and at worst misled by their investment funds' apparent focus on ESG, especially among ETFs.

November 2018

Unlocking the Inclusive Growth Story of the 21st Century: Accelerating Climate Action in Urgent TimesThe New Climate Economy

This fourth report of a cross-disciplinary group of former government officials, economists, and business leaders provides a detailed road map of actions that can create growth globally while addressing climate challenges.

Norway’s Sovereign Wealth Fund Builds Tool to Analyze Climate Risk to PortfolioReuters

The world’s largest pension fund has created a tool to analyze climate risk in its portfolio amidst rising costs, including how much of a company’s carbon dioxide emissions can be passed on to customers.

Fossil Fuel Money Crushed Clean Energy Ballot Initiatives Across the CountryVox

This piece details some clean energy ballot initiatives around the US in November’s mid-term elections and how they fared.

Drought Tests Australia’s Model Water MarketThe Wall Street Journal

Australia’s pioneering effort, at scale, to put in place the systems required to freely trade water rights is coming under criticism for putting pressure on farmers.

Startling New Research Finds Large Buildup of Heat in the Oceans, Suggesting a Faster Rate of Global WarmingThe Washington Post

The latest example of a vicious circle in climate change.

Report on US Sustainable, Responsible and Impact Investing TrendsUS SIF

US SIF’s 2018 report details growth in impact investing and key themes.

UK to Consult on Plastic Packaging Tax, Chancellor SaysThe Guardian

Another example of the growing concern and policy response to plastic usage.

U.S. Climate Report Warns of Damaged Environment and Shrinking EconomyThe New York Times

A federal report details the significant economic consequences of inaction on global warming.

October 2018

Earth’s Population is Skyrocketing. How Do You Feed 10 Billion People Sustainably?Washington Post

An overview of the way food production will need to change in the coming decades to meet growing global demand.

Transforming Health Care from the Ground UpHarvard Business Review

Case studies of two efforts at improving health care outcomes and reducing costs—increasingly urgent as health care spending approaches 20% of US GDP.

China’s Great Leap BackwardForeign Policy

An analysis of the under-appreciated “dismantling” of reforms that have helped China grow over the last few decades.

Can Germany survive the ‘iPhone moment’ for Cars?Financial Times

How the development of EVs and autonomous vehicles will impact the auto industry, particularly in Germany.

The Conservative Case for a Carbon TaxNiskanen Center

This detailed paper from the think tank Niskanen Center published in 2015 argues the conservative case for a carbon tax, addressing a series of common conservative objections.

Startling New Research Finds Large Buildup of Heat in the Oceans, Suggesting a Faster Rate of Global WarmingWashington Post

New measurement tools indicate that the speed of global warming is more rapid than previously thought.

Why Climate Change and Other Global Problems Are Pushing Some Business Leaders to Embrace RegulationHarvard Business Review

Companies are becoming more vocal in pushing for regulation, and further in advance of government action.

Special Report: Global Warming of 1.5 ºCIntergovernmental Panel on Climate Change

The Intergovernmental Panel on Climate Change releases its latest, most alarming report on the prospective impacts of global warming and the actions required both to mitigate and adapt to climate change.

September 2018

California Just Adopted its Boldest Energy Target Yet: 100% Clean ElectricityVox

California’s new law mandates 100% carbon-free electricity by 2045.

How the BBC Women are Working Toward Equal PayThe New Yorker

In depth overview of equal pay, the gender pay gap, and the lengthy process of attempting to achieve equity at a large company in the UK.

Big Investors Seek a #MeToo ClawbackThe Wall Street Journal

An interesting example of how a social issue is getting written into private equity deal documents.

From Trump to Trade, the Financial Crisis Still Resonates 10 Years LaterThe New York Times

Sorkin suggests that the growth in populism globally is an aftershock of the financial crisis.

At Wells Fargo, Discontent Simmers Among Female ExecutivesThe Wall Street Journal

An inside look at the culture of Wells Fargo and internal efforts to change it.

Why Big Companies Squander Good IdeasFinancial Times

Execution and implementation of new ideas is difficult at any scale.

The Ocean Cleanup is Starting, Aims to Cut Garbage Patch by 90% by 2040Forbes

An ocean clean-up company started by Boyan Slat at the age of 18 is reaching “production phase.” Uses clever design to gather plastic without harming marine life.

August 2018

The Water Crises Aren’t Coming, They’re HereEsquire

Water use is out of balance and leading to more frequent crises and potential conflicts.

The US is Losing the High-stakes Global Battery WarVerge

Interview with Steve Levine, author of The Powerhouse: America, China, and the Great Battery War, on the current state of the battery industry.

Recycling Can Put Money in Every American’s PocketMedium

Makes the case that the circular economy “will result in one of the largest investment opportunities in the US over the next decade.”

Here’s How America Uses Its LandBloomberg

An excellent infographic that shows how land is used across the US.

The Effects of Weather Events on Corporate Earnings are Gathering ForceS&P Global

An S&P Global study that quantifies the effects of severe weather on company results.

Losing Earth: The Decade We Almost Stopped Climate ChangeThe New York Times

An in-depth analysis of efforts in the late 1970s and 1980s to identify the causes and dangers of climate change and potential solutions.

Growth of Online Retail is Changing InflationFinancial Times

How online retail is affecting the behavior of inflation.

July 2018

Best Buy Should be Dead, but it’s Thriving in the Age of AmazonBloomberg

Some bricks and mortar retailers are adapting well to the new normal.

Governors can Determine the Future of WorkCommentary

States use creative solutions to address the future of work as “laboratories of democracy.”

Building Trust as Boards Make Long-term Strategic Investment DecisionsHigh Meadows Institute

Business leaders insist on the business case for ESG investments.

Now in Sight: Success Against an Infection that BlindsThe New York Times

This enduring cross-sector partnership illustrates the kind of social, and economic, impact that the private sector can help drive. Paula Luff, Inherent's Director, Sustainability & Impact, helped create and lead this program while she was at Pfizer.

Climate Vulnerable Countries Face $168 Billion In Higher Debt CostsForbes

A discussion of the risk premium added to borrowing costs attributable to climate-related issues.

Please ‘Disrespect’ Your Senior Management TeamJefferies Insights

An open letter to Jefferies employees shared publicly regarding the value of questioning any company’s leadership.

June 2018

Demystifying the Alphabet Soup of Reporting FrameworksEthical Corporation

Some guidance on the numerous reporting framework acronyms.

Short-Termism Is Harming the Economy

An opinion piece from Jamie Dimon and Warren Buffett regarding the costs of managing to quarterly earnings.

Surprises from the 2018 Proxy SeasonHarvard Law School Forum on Corporate Governance and Financial Regulation

An analysis of the trends in 2018’s proxy season.

Disposable America: A History of Modern Capitalism from the Perspective of the Straw. SeriouslyThe Atlantic

A history of the disposable straw, the environmental controversy surrounding it, and broader lessons on capitalism.

The Story of Coal in the 21st Century, in One Amazing MapVox

An overview of an interactive map depicting the development of coal power plants since 2000.

May 2018

We Made Plastic. We Depend On It. Now We’re Drowning In ItNational Geographic

A look at the global environmental impact of plastic, 40 percent of which is used just once before being discarded

Elon Musk’s Unusual Compensation Plan Isn’t Really About Compensation at AllHarvard Business Review

An analysis of the strategy behind the world’s largest CEO pay package--and one of the most unique.

Harvard’s Reinhart Says Emerging Markets Are in Tougher Spot Than During ‘08 CrisisBloomberg

A professor discusses her view of where EM markets are in the cycle.

Why Starbucks’s Bias Training, Despite Skepticism, Is an Important StartThe New York Times

An opinion piece about the value of Starbucks’s bias training.

April 2018

The Fix for ‘Extractive Capitalism’Top 1000 Funds

A professor’s view on how to improve capitalism, the “world’s largest co-operative system.”

Is ‘Being Green’ Rewarded in the Market?: An Empirical Investigation of Decarbonization and Stock ReturnsStanford Global Project Center Working Paper

An empirical analysis that demonstrates the alpha generation of a lower carbon investment portfolio.

Divided We LeadHarvard Business Review

A look at the increasingly public role many CEOs are playing in weighing in on controversial political and social issues.

March 2018

Counting Down to Day Zero in Cape TownThe New Yorker

How Cape Town and its residents are coping with an unprecedented water shortage, and its implications for business.

McDonald’s Becomes the First Restaurant Company to Set Approved Science Based Target to Reduce Greenhouse Gas EmissionsGlobe Newswire

Setting a self-imposed emission target and deadline is an intriguing leadership step for a company with McDonald’s visibility.

Merck C.E.O. Ken Frazier on Death Row Cases and the Corporate SoulThe New York Times

Merck’s CEO reflects on his career and the role of CEOs today.

A Meditating Truck Company: What Investing in Company Culture Really Looks LikeThrive Global

A look at the radical, productive culture of the electric truck company, Chanje.

February 2018

Are Hospitals Becoming Obsolete?The New York Times

An opinion piece about why the movement away from hospitals is a good thing.

BP Says Oil Demand to Peak by Late 2030sFinancial Times

One of the largest oil companies in the world predicts 300 million electric vehicles on the road by 2040, up from 3 million today.

Walmart and Dick’s Raise Minimum Age for Gun Buyers to 21The New York Times

Two of the US’s largest retailers voluntarily take a leadership stance on gun sales.

January 2018

Amazon HealthStratechery

Ben Thompson describes the theory for the Amazon-Berkshire Hathaway-JPMorgan long game.

Larry Fink’s Letter to Portfolio Company CEOs

The world's largest index fund manager calls on companies to foster long-term value.

Why People Conveniently ‘Forget’ that Child Labor Made their JeansMoneyish

Consumer behavior differs based on natural human tendencies.

Japan Inc.: A Corporate Culture on Trial After ScandalsFinancial Times

Data falsification highlights need for a “chief quality officer” to matter as much as chief financial officer.

Improving Workplace Culture, One Review at a TimeNew Yorker

How Glassdoor and sites like it provide radical transparency into corporate cultures.

Explore our library of third-party research and analysis on ESG integration and
sustainable investing.

 
ESG & Performance
Corporate Sustainability: First Evidence on Materiality
The Accounting Review | 2016

This study analyzes the financial and operational performance link between a company’s sustainability practices and how material those practices are to the company’s business vertical.

ESG & Performance
Corporate Sustainability: A Strategy?
Harvard Business School Accounting & Management Unit | 2019

The performance implications of adopting strategic sustainability practices for both return on capital and expectations of future performance, as reflected in price to book valuation multiples.

Credit
Pricing ESG Risk in Credit Markets
Hermes | 2017

Identifying the influence of ESG risks on credit-default spreads.

ESG & Performance
Integrating Alternative Data (Also Known as ESG Data) in Investment Decision Making
SSRN (Soh Young In, Dane Rook, Ashby H. B. Monk) | 2019

The authors suggest more effective ways to integrate ESG data, however imperfect, into investment decision-making processes.

Environment
Decarbonization Factors
SSRN (Alexander Cheema-Fox, Bridget Realmuto LaPerla, George Serafeim, David Turkington, Hui (Stacie) Wang) | 2019

An exploration of the relative performance of portfolio decarbonization strategies, and how performance is affected by institutional investor fund flows.

ESG & Performance
Shareholder Engagement on Environmental, Social, and Governance Performance
European Corporate Governance Institute | 2018

The authors study the financial impact of investor activism promoting ESG improvements.

Governance
Measuring the Economic Impact of Short-Termism
McKinsey Global Institute | 2017

A performance study comparing the financial results of management teams focused on long-term versus short-term performance.

ESG & Performance
Active Ownership
Review of Financial Studies | 2015

How active investor engagement with corporate management on material corporate social responsibility issues can positively impact profitability, efficiency, governance, and stock performance.

Governance
The Error at the Heart of Corporate Leadership
Harvard Business Review | 2017

The authors argue for a management approach beyond shareholder primacy, focusing on the long-term health of the business that can deliver both strong performance and value to society.

Environment
Is “Being Green” Rewarded in the Market?: An Empirical Investigation of Decarbonization and Stock Returns
Stanford Global Projects Center | 2018

An empirical investigation of the risk-return relationship between corporate environmental performance and financial performance, with a focus on companies’ carbon footprint.

ESG & Performance
The Relationship between Investor Materiality and the Sustainable Development Goals: A Methodological Framework
SSRN (Gianni Betti, Costanza Consolandi, Robert G. Eccles) | 2018

How performance on financially material ESG issues, as identified by the Sustainability Accounting Standards Board (SASB) can contribute to the United Nations’ Sustainable Development Goals.

ESG & Performance
The Impact of Corporate Sustainability on Organizational Processes and Performance
Management Science | 2017

An investigation of how a corporate culture of sustainability affects multiple facets of corporate behavior and performance outcomes.

ESG & Performance
ESG and Financial Performance: Aggregated Evidence from More Than 2000 Empirical Studies
Journal of Sustainable Finance and Investment | 2015

Analysis of 2,200 studies finds ESG’s influence on corporate financial performance is positive and the results appear to be stable over time.

Credit
Sustainable Investing and Bond Returns
Barclays | 2016

A rare analysis of the positive impact that ESG integration can have on fixed income portfolios, specifically investment grade corporate bonds.

Equity
A Practical Guide to ESG Integration for Equity Investing
UN PRI | 2016

Case studies that illustrate the range of ways in which equity investors incorporate ESG factors into their investment processes.

ESG & Performance
Making an Impact: Earning Returns on Sustainable Terms
Credit Suisse | 2019

An overview of the ESG investing ecosystem and the link between ESG performance and portfolio performance.

ESG & Performance
Impact Investing: The Performance Realities
Bank of America Merrill Lynch | 2018

An overview of the impact investing landscape and tools investors can use to effectively incorporate ESG factors.