The Woke Street Journal
Crazy week. You have a DA about to seize a Presidential candidate’s assets, what looks like an invasion at the border, illegals teaching people how to legally squat in someone else’s property, and the beginning of what I think will be an extremely important case about censorship. At least we don’t live in Canada.
One of the greatest existential threats we face. Canada Rolling Out Social Credit System, Citizens’ Bank Accounts Linked to Obedience Scores-Info Wars
How forcing Canadians and others around the world to maintain high social credit scores in order to buy and sell constitutes “inclusivity” and “fairness” remains unknown. OBE officials and other proponents of the construct never really say.
Why ESG Investing Might Never Recover-WSJ
Following a three-year craze for investment products focused on environmental, social and corporate-governance concerns, the percentage of newly created funds in the U.S. and Europe with ESG in their name has fallen from a peak of 8.3% to just 3.3%, according to an analysis of quarterly data by Morningstar Direct.
Likewise, online searches for “ESG investing” have plummeted back to mid-2019 levels, according to Google Trends. Mentions of the term in company analyst calls have dropped 59% from their quarterly peak in 2022, FactSet data suggest.
"People go to watch a movie or a show to be entertained," said Peltz. "They don’t go to get a message."
@TheChiefNerd Joe Rogan & Dave Attell on Illegal Migrants Squatting in the Homes of Americans: ‘That Is Bananas’ “The lady got arrested for changing the locks on her own home. They’re also saying in New York if you are in a house for 30 days, you legally become a tenant…You’re basically allowing people to steal people’s houses.”
Love this headline, the political system caused it. How the Political System Failed to Solve the Border Crisis-WSJ
Not what I would do with an invading army. Migrants Who Rushed National Guard At Border May Have Been Released Into US Interior: REPORT-Daily Caller
Meanwhile, they ruled that illegals can have guns. DOJ Launches National ‘Resource Center’ To Aid Authorities In Taking Firearms From People Deemed ‘Threat To Themselves Or Others’-Daily Wire
I’m still short. REPORT: Planet Fitness Assigns Staffer to Escort Trans Customer in Women’s Locker Room-Daily Caller
A staffer for a Senator we talk to forwarded this to us on Friday. DOL Urges 5th Circ. To Back Biden Admin. ESG Investing Rule-Law 360
The U.S. Department of Labor urged the Fifth Circuit on Thursday to uphold a rule allowing retirement advisers to consider social issues such as climate change when choosing investments, arguing that conservative states challenging the rule haven't shown it defies federal benefits law.
The agency asked the appellate court in an opening brief to back its arguments that the 2022 regulation does not hinder advisers' duties of loyalty established under the Employee Retirement Income Security Act and reject a legal challenge brought by more than two dozen Republican state attorneys arguing otherwise. Considering environmental, social and governance factors expressly allows them to meet those obligations, the agency said.
Real Estate Investors Turn to Lawyers After ‘Huge’ CO2 Shock-Bloomberg
Property owners across the region will need to invest vast sums in renovations to ensure their buildings aren’t emitting illegal levels of carbon dioxide or consuming excessive amounts of energy, according to lawyers advising the sector.
The situation “is causing huge problems,” said Rory Bennett, a managing associate at the real estate practice of Linklaters in London. Portfolios containing energy-inefficient buildings face “the task of expending a huge amount of capital to bring that up to scratch, together with refinancing or redeveloping at the highest interest rates we’ve seen in decades.”
I remember when comedy used to be funny. Howie Mandel Leads Mini Anti-Woke Comedy Revolt: ‘There Isn’t Anything We Shouldn’t Talk About’-Daily Wire
On the state level in case you are having trouble keeping track: A List of States That Have Banned, Limited and Attacked DEI Initiatives-The Root
Five times UK has gone 'so woke' it's left ordinary Brits exploding in fury-Express
The Washington Department of Children, Youth and Families’ draft home-study practice guide illustrates how the department interprets its requirements by giving examples of supportive behavior: displaying “Pride flags and similar indicators,” having “LGBTQIA+ authors, musicians and artists in your collections” and seeking “affirming medical care” for the child or youth.
In their application, the DeGrosses explained that while they would love and support any child, they couldn’t say or do anything that they felt would violate their Christian beliefs. That wasn’t good enough for the state, which rejected the application, citing the new regulations.
So it’s the car company’s fault?
Highlights from the Berenberg ESG Investor Survey:
Whilst the percentage of funds within our survey that incorporate ESG has remained relatively stable at about 80%, there has been a significant pullback (politically driven?) in the percentage of funds actually marketed as ESG v incorporating ESG but not explicitly marketed.
Unsurprisingly, the percentage of ESG marketed funds in N America has dropped significantly (with a corresponding rise in non-marketed ESG funds). The continued drop in Continental Europe is probably due to tightened domestic and EU disclosure requirements. It will be interesting to see if the UK numbers change post the introduction of SDR regulation later this year.
The percentage of article 8 & 9 labelled ESG funds in our survey continues to remain high (above 80% in Europe and UK) although North America has dropped. Also there has been a material increase in article 9 funds from UK.
ESG strategies are changing, although ESG integration (considering ESG factors in the investment process) is now by far the most popular. Interesting to see the fall in impact investing popularity and we have also for the first time added a transition category where already nearly 30% of respondents are using that approach, nearly as many as exclusion strategies.
Of those that do use transition strategies, c.75% are having at least more than half of their portfolio in transitioning companies.
Fortunately, given all the work we have done, the popular use of SDGs in various parts of the investment process continues - nearly 90% of respondents use them in some form
In terms of what topics investors care about most, in broad terms environment remains the most popular (41% ranked it first), but social held on to its gains seen last year and is higher ranked than in our 2021/22 surveys
On specific topics, social issues appear to be the ones moving up the agenda, although climate change is still top topic. Interesting to see the water theme (which we have written extensively about) rising to 4th.
When specific topics are reflected in SDG targeting, apart from SDG13 which we feel is misunderstood by many investors and corporates (it specifically targets climate adaptation), SDG13 - good health and wellbeing is now the highest rank. Worth noting the big rise in sustainable cities (another topic we have highlighted for 2024). We would expect the biodiversity related SDGs (13 & 14) to regain popularity when the new reporting frameworks are utilised (TNFD & SBTiN).
Finally, always a popular chart, we take a look at the most commonly excluded sectors. 2023 data seems to have been a blip and the percentages, after a big rise have fallen back to similar levels seen in our first two surveys. Fossil fuels are still the most excluded sector with 56% of all respondents excluding it (the highest level we have seen across the 4 years) and 83% of ESG funds excluding. Interesting to note that whilst defence exclusion continues to rise, despite the current geopolitical situation, the percentage of overall investors excluding tobacco seems to have dropped. Another hot topic, nuclear is still excluded from half of all funds that have exclusionary criteria and a third of all funds generally. We also take a look at commonly excluded commodities on the back of the upcoming UK and EU regulations.
Finally, maybe linked to the growth in transition investing, we have seen a big increase in the share of respondents who are engaging with ESG laggard companies. This is at the expense of divestment approach which has fallen significantly.
Wrapping this all up with the discussions we have been having with investors over the last 6-9 months we would also conclude -
Largest potential investment theme - transition investing
Most discussed large cap - Heidelberg Materials (BUY) and their transition plans
Fastest rising theme - social investing
Our favourite (and least known) social impact stock idea - Gedeon Richter (BUY) and their mental health and women's health drug franchises.
Most discussed mid-cap – Munters (BUY) - a play on AI/datacentres, water, food and batteries.
Least understood topic - deforestation regulation and impact on companies using commodities
Most debated stock - Barry Callebaut (BUY)- long term winner from cocoa deforestation regulations, short term pain from record cocoa prices
Top all-round winner - Bureau Veritas (BUY).
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