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Nossa Data

Larry Fink wrote another letter

Issue #66: A weekly update on responsible investment. Forwarded by a friend? Subscribe here.

Before going into our regularly scheduled ESG content, I have some exciting Nossa Data updates to share:

We joined an accelerator! We are very glad to announce that Nossa Data has been selected as one of 9 FinTech start-ups to join the Barclays Techstars Accelerator program in New York City. This program has been considered the best FinTech accelerator in the world and we are so excited to build Nossa Data’s software alongside world class mentors and investors. The accelerator funding is part of our pre-seed funding round which is now closed. One step further on our path of making ESG easy for companies. 🚀🌿

We are hiring! Thanks to our funding we are looking to make two full time hires for the Nossa Data team. First, we are hiring a full-stack developer with a background in machine learning. Next, we will hire a junior (max 5 years of experience) with a background in UX / UI or enterprise B2B sales. If you are interested in either of those roles, know someone who is a good fit or would simply like to be on our radar for future roles, please reach out (team@nossadata.com) letting us know about your background.

BlackRock’s Letter

Every year BlackRock’s CEO, Larry Fink writes a letter to CEOs. Last year’s letter had a massive impact on the growth of the ESG industry when he wrote: “climate risk is investment risk. This year, BlackRock is doubling down again.

A ‘highlights’ version of the 2021 letter is below:

“Over the past year, we experienced something even more far-reaching — a pandemic that has enveloped the entire globe and changed it permanently.

The pandemic has also accelerated deeper trends, from the growing retirement crisis to systemic inequalities. Several months into the year, the pandemic collided with a wave of historic protests for racial justice in the United States and around the world.

In March, the conventional wisdom was the crisis would divert attention from climate. But just the opposite took place, and the reallocation of capital accelerated even faster than I anticipated. We know that climate risk is investment risk. But we also believe the climate transition presents a historic investment opportunity.

Assessing sustainability risks requires that investors have access to consistent, high-quality, and material public information. This is why last year, we asked all companies to report in alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board (SASB), which covers a broader set of material sustainability factors. We are greatly encouraged by the progress we have seen over the past year — a 363% increase in SASB disclosures and more than 1,700 organizations expressing support for the TCFD.

We are asking companies to disclose a plan for how their business model will be compatible with a net zero economy.

We are asking you to disclose how this plan is incorporated into your long-term strategy and reviewed by your board of directors.

The more your company can show its purpose in delivering value to its customers, its employees, and its communities, the better able you will be to compete and deliver long-term, durable profits for shareholders.

The world is still in crisis and will be for some time. We face a great challenge ahead. The companies that embrace this challenge — that seek to build long-term value for their stakeholders — will help deliver long-term returns to shareholders and build a brighter and more prosperous future for the world.”

Top Stories

Why COVID-19 is driving action on climate, biodiversity and social justice
For large numbers of the investment community, the pandemic has been a wake-up call for the need to invest is a more sustainable, holistic way. And those strategies are reaping dividends. In a recent report, Morningstar examined 745 sustainable funds compared to 4,900 traditional funds invested across large companies worldwide and found that sustainable funds performed better than their peers over various time horizons. Over five years the average annual return for a sustainable fund was 7.3 per cent, while its traditional counterpart returned 6.1 per cent. We expect to see more money moving into ESG funds in 2021 and for sustainable investing to be well on the way to becoming the new normal.
Fiona Reynolds from UN PRI.

Top 10 Trends in ESG — Our Expectations for 2021
ESG Consultancy KKS Advisor has published 10 trends in ESG. What is number 1? Tech solutions to make ESG activities more efficient. The list says: “with almost universal acceptance that ESG is here to stay, firms are investing in these solutions to not only gain efficiency, but to also facilitate more effective and targeted communications to stakeholders.”

What other trends are they predicting?

  • Wider spread ESG integration
  • Outcomes-focused diversity & inclusion metrics
  • An increasingly blurred line between ESG & impact
  • The rise of the CSO
  • Finger-tip access to carbon risk analytics
  • More collaboration and more action!

I would also take a look at UBS trends for 2021. They emphasize ‘Investor Engagement’ in the top position saying: “We expect asset owners to call for companies and investors to provide better sustainability data — alongside clear and measurable energy transition plans. “

Social transformation framework To measure and incentivize companies to leave no one behind — World Benchmarking Alliance

The World Benchmarking Alliance has published a new Framework. This time it is for social transformation: achieve universal human development by respecting human rights, promoting equality and empowering people to pursue the opportunities and choices they value.

What are the business conduct expectations to achieve social transformation?

Refinitiv makes company scores free
Refinitiv announced that its ESG company scores are now available for free. Making ESG company scores freely available on Refinitiv’s public website enables anyone to see the ESG footprint, based on publicly disclosed data, of over 10,000 companies. For any company wanting to submit additional information there is a contributor tool to enable a fully comprehensive dataset that encourages disclosure. The Refinitiv ESG Company Scores are designed to transparently and objectively measure a company’s relative ESG performance, commitment and effectiveness across 10 main themes, based on publicly available and auditable data.

Global Business Leaders Support ESG Convergence by Committing to Stakeholder Capitalism Metrics
A growing coalition of 61 top business leaders across industries announced today their commitment to the Stakeholder Capitalism Metrics, a set of environmental, social and governance (ESG) metrics and disclosures released by the World Economic Forum and its International Business Council (IBC) in September 2020, that measure the long-term enterprise value creation for all stakeholders. These leaders and their organizations, including Dow, Unilever, Nestlé, PayPal, Reliance Industries and Sony have today committed to:

  • Reflect the core metrics in their reporting to investors and other stakeholders (e.g. annual report, sustainability report, proxy statements, or other materials) by reporting on the metrics most relevant to their business or briefly explaining why a different approach is more appropriate
  • Publicly support this work and encourage their business partners to do so
  • Promote the further convergence of existing ESG standards, frameworks and principles to support progress towards a globally accepted solution for non-financial reporting on common ESG metrics

Sustainability Reports.

Bloomberg’s 2021 Gender-Equality Index Reveals Increased Disclosure as Companies Reinforce Commitment to Inclusive Workplaces
Bloomberg announced that 380 companies headquartered across 44 countries and regions are included in the 2021 Bloomberg Gender-Equality Index (GEI). For the first time, firms domiciled in Indonesia and Bermuda are reporting gender-related data. The GEI brings transparency to gender-related practices and policies at publicly-listed companies, increasing the breadth of environmental, social, governance (ESG) data available to investors. At a time when it is critical for firms to demonstrate their commitment to gender equality, the companies included in this year’s index are setting an example for more transparent reporting and disclosure of social data.
Bloomberg.

Data and AI Belong At the Heart of ESG Initiatives
Sustainable transformation builds on digital transformation and then incorporates environmental, social, and corporate governance (ESG) data and corporate social responsibility (CSR) goals into the products and services that a business commercializes. Over the next decade, we will see massive differences in performance between companies that operationalize sustainability and those that don’t. Companies placing the same emphasis on sustainability as they make technological investments see similar returns; those who put data and AI at the heart of their ESG initiatives will build more resilient, sustainable, profitable, and attractive businesses. CFO.

**Want to make your ESG processes digital, schedule a call to see a demo of Nossa Data’s software via emailing: team@nossadata.com

Report Highlight

Why Investing in Nature is Key to Climate Change Mitigation

McKinsey by Daniel Aminetzah, Emily Birch, Julien Claes, Joshua Katz, Peter Mannion, Sebastien Marlier, Dickon Pinner, and Antoine Stevens

Natural climate solutions (NCS) — conservation, restoration, and land-management actions that increase carbon storage and avoid greenhouse-gas emissions — offer a way to address both crises and to increase resilience as the climate changes.

What are Nature Climate Solutions: Natural climate solutions (NCS) are “conservation, restoration and improved land management actions that increase carbon storage and/or avoid greenhouse gas emissions”. NCS therefore play a role in avoiding/reducing emissions by, for instance, avoiding deforestation, and removing/sequestering emissions such as through restoring peatlands as part of climate-mitigation pathways.

NCS have environmental and financial attractions. Many NCS have low costs compared to other climate mitigation options, as well as environmental, social and economic co-benefits such as safeguarding biodiversity, securing water supplies and providing jobs for local communities.

6 key actions to unlock Nature Climate Solutions

Read the Report.

Other Interesting Reads:

Stock Price Reactions to ESG News: The Role of ESG Ratings and Disagreement: George Serafeim & Aaron Yoon. Read the paper.

Report Highlight: Check out the Impact Investing Institute’s Impact Report from 2020.

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