Long on the E short on the S and G



12 Tech Companies Who Are Proactive About Being Green


The go green movement is strong here in the United States. From largemultinational companies like Walmart to my local coffee shop, sustainablebusiness practices are cropping up everywhere – including the tech sector.These 12 tech companies are proactive about being green – not simply sayingthat they are green but actually backing up their statements with actions.Google When I think “tech company” the first thing that comes to mind is Google.Google has a comprehensive sustainability plan in place, including some rathercreative eco-friendly measures. For one week each spring, the fields nearGoogle’s Mountain View headquarters are filled with goats. The goatsessentially mow and fertilize the lawn. No noisy polluting lawn mowers and nochemical-ridden fertilizers. Instead, the goats hang out for a week and takecare of business, literally.pair NetworksAlthough there are several eco-conscious hosting providers to choose from,pair Networks has been green since before going green was so trendy. SinceAugust of 2007, pair Networks’ operations and facilities have been carbonneutral. Learn more by reading thepair Networks Environmental Policy.CO2Stats If you’re hoping to achieve pair Networks’ carbon neutral status with yoursite then CO2Stats can help you. Even if you host with pair, you need tooffset your visitors’ carbon footprints. When you sign up with CO2Stats you’llbe able to offset your site’s carbon footprint, receive carbon footprintreduction tips and receive a customized badge to let your customers know thatyou’re dedicated to carbon neutrality.Cisco Cisco is another eco-friendly leader in the tech industry. The company hasmade Fortune’s list of the 100 Best Companies to Work For since the listoriginated in 1998. One reason it made 2011’s list is that it has “one of thehighest percentages of telecommuters.” Telecommuting saves money in energycosts and reduces tailpipe emissions by eliminating commutes.Nokia Nokia was once again recognized as the world’s most sustainable technologycompany on the 2010/2011 Dow Jones Sustainability Index. Green initiatives atthis Finland-based company include an electronics take-back and recyclingprogram, a focus on human rights and multi-year energy use reduction goals.Dell Dell Computers topped the 2010 Newsweek Green Rankings due in part to itsaggressive goal of reducing greenhouse gas emissions at the company by 40% by2015. Dell is also focusing on reducing the environmental impact of itsproduct line with a 25% energy use reduction in both its laptop and desktopmodels.Intel In 2010, Intel was named the Greenest Company in America by Forbes magazine.One of Intel’s biggest eco-initiatives is in the green energy arena. Accordingto Forbes, the company uses 1.43 billion kWh of energy annually but 51% comesfrom renewable sources like solar, wind, geothermal and biomass.OnRamp Based in Austin, Texas, OnRamp provides a variety of products and services tocustomers including colocation, managed servers, disaster recovery and more.The facility also offers its customers peace of mind knowing that the companyis powered by 100% renewable energy. Learn more: Austin’s Original GreenInternet Company.Salesforce.com Salesforce.com earned the top spot on the Fortune Magazine’s 25 Top-PayingCompanies list. The company not only pays its associates well, it does sowhile being respectful of the environment. The company’s environmental policystatement includes LEED green building certification goals, recycling andcomposting programs, and the reduction of non-essential business travel byusing videoconferencing technology.Rackspace Rackspace is another eco-friendly tech company. The company’s Texasheadquarters carries a LEED Gold certification from the U.S. Green BuildingCouncil (USGBC), the largest green building certification program in theworld. Rackspace also has a tool that allows customers to calculate theircompany’s carbon footprint. The tool then provides information on reducingtheir environmental impact.Adobe Adobe has been a major player in the tech and environmental arenas for years.The company is home to three LEED Platinum certified buildings, the highestgreen building rating available from the USGBC. The employees are also activein the go green movement with approximately 97 percent of office wastegenerated at the San Jose location either recycled or otherwise diverted fromlandfills.Hewlett-Packard Hewlett-Packard has its hands in all parts of the tech sector – from computersto networking equipment to calculators and software. The company also has itshands in all parts of the sustainability movement with initiatives that focuson waste and energy reduction, a partnership with the World Wildlife Fundfocusing on climate change research, and reducing the use of toxic chemicalsin its products.Do you have a favorite tech company that is also proactive about being green?* * *Photo: DoNotLick/FlickrBehind the buzz of ESG investing, a focus on tech giants and no regulation * Despite its exponential growth in the last few years, environment, social and governance (ESG) investment is still very unclear and controversial, which makes it hard to define what it means. * According to a study by financial markets data provider Refinitiv, the largest and best-known ESG funds invest most of their clients’ money in big tech companies like Google, Microsoft, Amazon, Apple and Facebook — companies with a small carbon footprint and high returns for shareholders. * Some experts say this focus on carbon means the financial market often ignores other ESG issues like data security and labor rights, where big-tech companies have tended to fall short. * There are some initiatives, mainly in Europe, to create rules and standards for ESG financial products, but for now, almost any company can be bundled into an ESG index and sold as sustainable.The idea of responsible investing isn’t new. It was born in the 1970s withreligious groups that didn’t want to see their money invested in sectors likeweapons, liquor or tobacco. The roots of one type of such investing that beganin the 2000s, however, were based on a broader and more appealing concept:ESG, or environment, social and governance.In 2020, when the CEO of BlackRock — the largest asset manager of the world,with more than $7 trillion under management — put climate change at the centerof his traditional letter to CEOs, ESG definitely stopped being a nicheconcern and entered into Wall Street’s agenda. Now, it’s hard to find a bankor broker that doesn’t have an ESG fund to offer to its clients.The pandemic has just strengthened this tendency by hitting carbon-intensivesectors hard and encouraging a green economic recovery. Almost every week, anew headline shows how ESG investing has grown. “I have seen charts that rangefrom anything from $800 billion up to $40 trillion,” says Robert Jenkins, headof global research at Refinitiv Lipper, a company from the London StockExchange Group that provides financial data and insights to investors andbusiness.According to Refinitiv’s figures, assets under management in ESG funds leapedfrom $666.5 billion in 2004 to $3.47 trillion in 2020. That’s a conservativefigure when compared with the $30.7 trillion presented in the last report(from 2018) of the Global Sustainable Investment Alliance, formed bysustainable investment organizations around the world. According to Bloomberg,global ESG assets are on track to exceed $53 trillion by 2025, representingmore than a third of all assets under management.“This chart changes over time because a fund would all of a sudden say ‘wewill be utilizing an ESG lens in our investment,’ which means nothing,”Jenkins says. “How you categorize funds in an ESG perspective isextraordinarily difficult due to the lack of standardizations.”But what is behind this ESG excitement? And where is all this money ending up,ultimately? To answer these questions, Jenkins analyzed 28 of the largest andbest-known ESG funds in the market. Of these, 12 are active funds — whichmeans they have a portfolio manager with autonomy to choose the companies thefund will invest in — and hold a combined $33 billion. The 16 other funds have$30 billion invested and are passive funds, meaning their portfolios simplymirror an index (a list of companies), like the Dow Jones SustainabilityIndex, for instance.Despite having different investment strategies, Jenkins found, both types offunds invest the majority of their clients’ money in a very select group ofcompanies: Microsoft, Google, Apple and Amazon. In the case of passive funds,Facebook also makes the list.The main reason for the omnipresence of tech giants in ESG funds, according toJenkins, is that they’re known for having a small carbon footprint.“All those funds marked themselves as ESG funds or socially responsible fundsbut they are basically, for the most part, carbon-free funds,” he says.It also doesn’t hurt, naturally, that these companies have been on a years-long bull run, outpacing market averages and most typical stocks.A biofuel plant in Piricicaba, São Paulo state, Brazil. Sugarcane is turnedinto ethanol by fermenting sugarcane juice and molasses. Photo credit:Department of Energy and Climate Change on Flickr.

Long on the E, short on the S and G


A big-tech company, however, isn’t necessarily a low-carbon company. Amazon,for instance, relies on a global transportation and logistics network todeliver all kinds of products, from Kindles and computers to socks, makeup,food and cleaning products.“So why are they a top-pick? Because people tend to think of them as a techcompany and tech companies are assumed to have good carbon footprints,”Jenkins says.The perception is that tech giants tend to have a smaller carbon footprintthan companies in other sectors — or, at least, it’s easier for them to reducetheir emissions.“If you are an oil company, for instance, to reduce your carbon footprint youhave to change your product. If you are Google and your data center consumes alot of energy, you can hire a solar energy system and that is it,” saysGustavo Pimentel from Sitawi, a Brazilian firm that works with investors andcompanies on sustainable financing.Tech giants have also made high-profile commitments on the carbon front.Google claims to be the “first major company to be carbon neutral,” saying itdid so in 2007. Last year, it announced it would compensate for all itsemissions since its founding in 1998, and that it would become carbon-free by2030. Microsoft says it will be carbon negative by 2030 and will compensatefor all the CO₂ it has emitted since its foundation, in 1977, by 2025. Apple,which says it is already carbon neutral for its global corporate operations,says it will do the same across its entire business by 2030, including in itsmanufacturing supply chain and product life cycle. Amazon says it will be net-zero by 2040, 10 years ahead of the Paris Agreement.But the focus on carbon may be missing the point. Jenkins says that ifgreenhouse gas emissions aren’t the main ESG challenge for tech companies — asthey would be for an oil company, for example — then they shouldn’t be such afocal point of their ESG ratings. The “S” and the “G” aspects deserve moreattention, he says.“Some of these companies have issues in their promotional and pay practices,and we certainly know that firms like Facebook have some issues in terms ofdata privacy. So you can argue that maybe they shouldn’t be in these funds,”he says, referring to Facebook’s data leaks and recent controversies overlabor relations in the tech industry.Amazon is facing what the U.S. media calls the biggest union push in itshistory. Google, routinely named one of the best companies to work for, facesallegations by ex-employees that it unlawfully monitored and fired them due totheir union activity. In 2019, a report by the watchdog group China LaborWatch alleged Apple was breaking labor laws at its largest iPhone factory, inChina.Fábio Alperowitch is the portfolio manager at Fama, a Brazilian fund thatconsiders “ethical and ESG principles” in its investment decisions. LikeJenkins, he says this focus on carbon tends to gloss over the other problems.“If I invest in a construction company, the first thing I need to know as aninvestor is about the company’s labor security. Each sector has its concerns.When you only think about carbon, the companies will focus on aspects that arenot necessarily the most important,” Alperowitch says.But this position isn’t a universally held one. Gustavo Pinheiro, from Clima eSociedade, a nonprofit working toward a low-carbon economy, says he welcomesthe focus on CO₂ as part of the solution.“We need all the companies to assume science-based goals and to commit todecarbonize 100% of its productive chains by the half of the century,” hesays. By improving their carbon performance, he says, companies end upaddressing other aspects of ESG, since they have to revisit their processes,production chains and even their governance. “With climate, you are packaginga lot of things,” Pinheiro says.Futaleufú River in Chile, where the Spanish energy company Endesa announced in2016 that it was revoking all claims. Photo by Kaaty.7, licensed under CC BY-SA 3.0.

The math behind ESG


Either way, the experts interviewed for this article agree that the financialmarket is much more prepared to deal with the climate change issue than withother aspects of the ESG agenda. That’s because, unlike with other aspects ofESG — like biodiversity, water usage, social impact, or deforestation —there’s a universally accepted methodology for calculating and comparingcarbon emissions.“Investors like to quantify stuff,” says Ward Warmerdam, a senior researcherat Profundo, a Netherlands-based nonprofit that works with environmental data.“If you can put a number on it then you can make some kind of a program orcalculation to invest in those companies. But, why try to come up with a valueto nature?” he says. “Would it give an excuse to destroy nature to a certainextent, as long as we compensate it with another number? I think there is alot of focus in trying to quantify things while the most important thing is tomake sure the companies that you finance aren’t behaving poorly, whateverquantity there is.”While financial market experts may know a lot about measuring net profits,earnings before interest and other financial figures, they’re still learninghow to analyze the environmental and social impacts of investments.According to Jenkins, most ESG active fund managers rely on outside ratingagencies like MSCI or Sustainalytics to decide which companies to include intheir portfolios. In the case of passive funds, they mirror well-known socialresponsibility indexes, like S&P’s ESG Index. Some investment firms, on theother hand, have their own and well-structured ESG analysts teams.“There are several shops out there, like Calvert, for example, that had reallycreated a specialist team of ESG experts and developed their own internalproprietary rating structures to rank companies by distinctive factors acrossE, S and G pillars,” Jenkins says. “It is a long process that takes a team ofexperts. That is also the reason why the prices of these funds may be a littlehigher.”While there is no consensus about what ESG is and how to rate companies,almost everything can fit into the ESG box.“There is no regulator[y] authority internationally monitoring these ratingagencies to make sure that they are all doing an equally good job, havesimilar standards or at least meet a minimal aspect of ESG rating,” Warmerdamsays.“It is really messy and inconsistent. Fortunately, there is more legislationin Europe coming about it,” he adds, referring to the EU Sustainable FinanceDisclosure Regulation (SFDR), whose first phase entered into force last month.Through this regulation, all financial market participants and financialadvisers will have to explain in detail how they integrate ESG factors intotheir finance products.Jenkins says he’s optimistic about improvements in the quality of ESG data ascompanies come under pressure to disclose more non-financial information.“As disclosures [become] more homogeneous and standardized, I think that is[going to] drive more alignment and more correlation among rating agencies inESG,” he says.The UK’s Drax power station, one of the world’s largest users of forestbiomass for energy production. Photo credit: DECCgovuk on VisualHunt / CC BY-ND.

From cookie cutter to impact investing


As the Refinitv study shows, there’s great homogeneity across the investmentportfolios of the most well-known ESG funds — the ones Jenkins calls “cookie-cutter” funds.“They have this broad ESG umbrella framing where they are investing in andthey largely invest in well-known securities that are heavily traded on themarket, so there is an element of safety in using these funds,” he says.But the ESG universe goes far beyond these “cookie-cutter” options. MSCI, theworld’s largest provider of ESG indexes, has more than 1,500 indexes of thiskind. “ESG is very sexy. Just three words that fit in any headline and in thesuffix of any fund’s name,” says Sitawi’s Pimentel.Potential investors in an ESG fund first look at its strategy. Many funds usethe negative screening approach, which means they identify certain sectors torule out. For many years, this no-go list was mainly composed of tobacco,alcohol and weapons makers. More recently, the energy sector has become thebiggest villain thanks to its carbon emissions.Other funds use the best-in-class strategy; instead of excluding sectors, itfocuses only on the companies with better ESG ratings in each sector of theeconomy (energy, utilities, information technology, real estate, etc.).Another possibility is active ownership, when investors use their role as ashareholder to press for ESG improvements, one of several ESG strategiesavailable to investors pushing for change.“I lean towards what I call a more positive impact investing approach,” saysJenkins, who wrote a guide to help beginners choose an ESG fund. “Instead ofnegatively screening out all the energy companies, for instance, try to findone that is making meaningful, viable and profitable changes in that space.”For investors who not only want to avoid companies with negative impacts butalso support companies making a positive impact on the world, there’s “impactinvesting” — funds usually focused on startups and non-listed companies andconsidered a niche within the ESG investing universe.Options abound, and the first step for investors should be identifying theirpriorities when it comes to ESG: global warming, water shortage, genderequality, racism, social inequality, deforestation or something else.“It is hard to find a security that ticks all E, S and G the boxes very well,”Jenkins says. “And if you have a fund invested only in firms that scoredextraordinarily high on all three boxes it probably is going to be a fund withsmaller and more innovative companies. You may not want to put the bulk ofyour money on it because it may be more volatile.”Despite the challenges and inconsistencies of ESG finance, Warmerdam says itdoes have the merit of pushing companies in the right direction.“It is a growing industry and it means that the companies are being pushed toimprove their practices on the ground, even if it is slightly indirect,” hesays.Banner image: Tapajós river basin, next to Sawré Muybu indigenous land, ishome to the Munduruku people, Pará state, Brazil. The Brazilian governmentplans to build 43 dams in the region. Photo via Greenpeace.Behind the buzz of ESG investing, a focus on tech giants and no regulation * Despite its exponential growth in the last few years, environment, social and governance (ESG) investment is still very unclear and controversial, which makes it hard to define what it means. * According to a study by financial markets data provider Refinitiv, the largest and best-known ESG funds invest most of their clients’ money in big tech companies like Google, Microsoft, Amazon, Apple and Facebook — companies with a small carbon footprint and high returns for shareholders. * Some experts say this focus on carbon means the financial market often ignores other ESG issues like data security and labor rights, where big-tech companies have tended to fall short. * There are some initiatives, mainly in Europe, to create rules and standards for ESG financial products, but for now, almost any company can be bundled into an ESG index and sold as sustainable.The idea of responsible investing isn’t new. It was born in the 1970s withreligious groups that didn’t want to see their money invested in sectors likeweapons, liquor or tobacco. The roots of one type of such investing that beganin the 2000s, however, were based on a broader and more appealing concept:ESG, or environment, social and governance.In 2020, when the CEO of BlackRock — the largest asset manager of the world,with more than $7 trillion under management — put climate change at the centerof his traditional letter to CEOs, ESG definitely stopped being a nicheconcern and entered into Wall Street’s agenda. Now, it’s hard to find a bankor broker that doesn’t have an ESG fund to offer to its clients.The pandemic has just strengthened this tendency by hitting carbon-intensivesectors hard and encouraging a green economic recovery. Almost every week, anew headline shows how ESG investing has grown. “I have seen charts that rangefrom anything from $800 billion up to $40 trillion,” says Robert Jenkins, headof global research at Refinitiv Lipper, a company from the London StockExchange Group that provides financial data and insights to investors andbusiness.According to Refinitiv’s figures, assets under management in ESG funds leapedfrom $666.5 billion in 2004 to $3.47 trillion in 2020. That’s a conservativefigure when compared with the $30.7 trillion presented in the last report(from 2018) of the Global Sustainable Investment Alliance, formed bysustainable investment organizations around the world. According to Bloomberg,global ESG assets are on track to exceed $53 trillion by 2025, representingmore than a third of all assets under management.“This chart changes over time because a fund would all of a sudden say ‘wewill be utilizing an ESG lens in our investment,’ which means nothing,”Jenkins says. “How you categorize funds in an ESG perspective isextraordinarily difficult due to the lack of standardizations.”But what is behind this ESG excitement? And where is all this money ending up,ultimately? To answer these questions, Jenkins analyzed 28 of the largest andbest-known ESG funds in the market. Of these, 12 are active funds — whichmeans they have a portfolio manager with autonomy to choose the companies thefund will invest in — and hold a combined $33 billion. The 16 other funds have$30 billion invested and are passive funds, meaning their portfolios simplymirror an index (a list of companies), like the Dow Jones SustainabilityIndex, for instance.Despite having different investment strategies, Jenkins found, both types offunds invest the majority of their clients’ money in a very select group ofcompanies: Microsoft, Google, Apple and Amazon. In the case of passive funds,Facebook also makes the list.The main reason for the omnipresence of tech giants in ESG funds, according toJenkins, is that they’re known for having a small carbon footprint.“All those funds marked themselves as ESG funds or socially responsible fundsbut they are basically, for the most part, carbon-free funds,” he says.It also doesn’t hurt, naturally, that these companies have been on a years-long bull run, outpacing market averages and most typical stocks.A biofuel plant in Piricicaba, São Paulo state, Brazil. Sugarcane is turnedinto ethanol by fermenting sugarcane juice and molasses. Photo credit:Department of Energy and Climate Change on Flickr.

Long on the E, short on the S and G


A big-tech company, however, isn’t necessarily a low-carbon company. Amazon,for instance, relies on a global transportation and logistics network todeliver all kinds of products, from Kindles and computers to socks, makeup,food and cleaning products.“So why are they a top-pick? Because people tend to think of them as a techcompany and tech companies are assumed to have good carbon footprints,”Jenkins says.The perception is that tech giants tend to have a smaller carbon footprintthan companies in other sectors — or, at least, it’s easier for them to reducetheir emissions.“If you are an oil company, for instance, to reduce your carbon footprint youhave to change your product. If you are Google and your data center consumes alot of energy, you can hire a solar energy system and that is it,” saysGustavo Pimentel from Sitawi, a Brazilian firm that works with investors andcompanies on sustainable financing.Tech giants have also made high-profile commitments on the carbon front.Google claims to be the “first major company to be carbon neutral,” saying itdid so in 2007. Last year, it announced it would compensate for all itsemissions since its founding in 1998, and that it would become carbon-free by2030. Microsoft says it will be carbon negative by 2030 and will compensatefor all the CO₂ it has emitted since its foundation, in 1977, by 2025. Apple,which says it is already carbon neutral for its global corporate operations,says it will do the same across its entire business by 2030, including in itsmanufacturing supply chain and product life cycle. Amazon says it will be net-zero by 2040, 10 years ahead of the Paris Agreement.But the focus on carbon may be missing the point. Jenkins says that ifgreenhouse gas emissions aren’t the main ESG challenge for tech companies — asthey would be for an oil company, for example — then they shouldn’t be such afocal point of their ESG ratings. The “S” and the “G” aspects deserve moreattention, he says.“Some of these companies have issues in their promotional and pay practices,and we certainly know that firms like Facebook have some issues in terms ofdata privacy. So you can argue that maybe they shouldn’t be in these funds,”he says, referring to Facebook’s data leaks and recent controversies overlabor relations in the tech industry.Amazon is facing what the U.S. media calls the biggest union push in itshistory. Google, routinely named one of the best companies to work for, facesallegations by ex-employees that it unlawfully monitored and fired them due totheir union activity. In 2019, a report by the watchdog group China LaborWatch alleged Apple was breaking labor laws at its largest iPhone factory, inChina.Fábio Alperowitch is the portfolio manager at Fama, a Brazilian fund thatconsiders “ethical and ESG principles” in its investment decisions. LikeJenkins, he says this focus on carbon tends to gloss over the other problems.“If I invest in a construction company, the first thing I need to know as aninvestor is about the company’s labor security. Each sector has its concerns.When you only think about carbon, the companies will focus on aspects that arenot necessarily the most important,” Alperowitch says.But this position isn’t a universally held one. Gustavo Pinheiro, from Clima eSociedade, a nonprofit working toward a low-carbon economy, says he welcomesthe focus on CO₂ as part of the solution.“We need all the companies to assume science-based goals and to commit todecarbonize 100% of its productive chains by the half of the century,” hesays. By improving their carbon performance, he says, companies end upaddressing other aspects of ESG, since they have to revisit their processes,production chains and even their governance. “With climate, you are packaginga lot of things,” Pinheiro says.Futaleufú River in Chile, where the Spanish energy company Endesa announced in2016 that it was revoking all claims. Photo by Kaaty.7, licensed under CC BY-SA 3.0.

The math behind ESG


Either way, the experts interviewed for this article agree that the financialmarket is much more prepared to deal with the climate change issue than withother aspects of the ESG agenda. That’s because, unlike with other aspects ofESG — like biodiversity, water usage, social impact, or deforestation —there’s a universally accepted methodology for calculating and comparingcarbon emissions.“Investors like to quantify stuff,” says Ward Warmerdam, a senior researcherat Profundo, a Netherlands-based nonprofit that works with environmental data.“If you can put a number on it then you can make some kind of a program orcalculation to invest in those companies. But, why try to come up with a valueto nature?” he says. “Would it give an excuse to destroy nature to a certainextent, as long as we compensate it with another number? I think there is alot of focus in trying to quantify things while the most important thing is tomake sure the companies that you finance aren’t behaving poorly, whateverquantity there is.”While financial market experts may know a lot about measuring net profits,earnings before interest and other financial figures, they’re still learninghow to analyze the environmental and social impacts of investments.According to Jenkins, most ESG active fund managers rely on outside ratingagencies like MSCI or Sustainalytics to decide which companies to include intheir portfolios. In the case of passive funds, they mirror well-known socialresponsibility indexes, like S&P’s ESG Index. Some investment firms, on theother hand, have their own and well-structured ESG analysts teams.“There are several shops out there, like Calvert, for example, that had reallycreated a specialist team of ESG experts and developed their own internalproprietary rating structures to rank companies by distinctive factors acrossE, S and G pillars,” Jenkins says. “It is a long process that takes a team ofexperts. That is also the reason why the prices of these funds may be a littlehigher.”While there is no consensus about what ESG is and how to rate companies,almost everything can fit into the ESG box.“There is no regulator[y] authority internationally monitoring these ratingagencies to make sure that they are all doing an equally good job, havesimilar standards or at least meet a minimal aspect of ESG rating,” Warmerdamsays.“It is really messy and inconsistent. Fortunately, there is more legislationin Europe coming about it,” he adds, referring to the EU Sustainable FinanceDisclosure Regulation (SFDR), whose first phase entered into force last month.Through this regulation, all financial market participants and financialadvisers will have to explain in detail how they integrate ESG factors intotheir finance products.Jenkins says he’s optimistic about improvements in the quality of ESG data ascompanies come under pressure to disclose more non-financial information.“As disclosures [become] more homogeneous and standardized, I think that is[going to] drive more alignment and more correlation among rating agencies inESG,” he says.The UK’s Drax power station, one of the world’s largest users of forestbiomass for energy production. Photo credit: DECCgovuk on VisualHunt / CC BY-ND.

From cookie cutter to impact investing


As the Refinitv study shows, there’s great homogeneity across the investmentportfolios of the most well-known ESG funds — the ones Jenkins calls “cookie-cutter” funds.“They have this broad ESG umbrella framing where they are investing in andthey largely invest in well-known securities that are heavily traded on themarket, so there is an element of safety in using these funds,” he says.But the ESG universe goes far beyond these “cookie-cutter” options. MSCI, theworld’s largest provider of ESG indexes, has more than 1,500 indexes of thiskind. “ESG is very sexy. Just three words that fit in any headline and in thesuffix of any fund’s name,” says Sitawi’s Pimentel.Potential investors in an ESG fund first look at its strategy. Many funds usethe negative screening approach, which means they identify certain sectors torule out. For many years, this no-go list was mainly composed of tobacco,alcohol and weapons makers. More recently, the energy sector has become thebiggest villain thanks to its carbon emissions.Other funds use the best-in-class strategy; instead of excluding sectors, itfocuses only on the companies with better ESG ratings in each sector of theeconomy (energy, utilities, information technology, real estate, etc.).Another possibility is active ownership, when investors use their role as ashareholder to press for ESG improvements, one of several ESG strategiesavailable to investors pushing for change.“I lean towards what I call a more positive impact investing approach,” saysJenkins, who wrote a guide to help beginners choose an ESG fund. “Instead ofnegatively screening out all the energy companies, for instance, try to findone that is making meaningful, viable and profitable changes in that space.”For investors who not only want to avoid companies with negative impacts butalso support companies making a positive impact on the world, there’s “impactinvesting” — funds usually focused on startups and non-listed companies andconsidered a niche within the ESG investing universe.Options abound, and the first step for investors should be identifying theirpriorities when it comes to ESG: global warming, water shortage, genderequality, racism, social inequality, deforestation or something else.“It is hard to find a security that ticks all E, S and G the boxes very well,”Jenkins says. “And if you have a fund invested only in firms that scoredextraordinarily high on all three boxes it probably is going to be a fund withsmaller and more innovative companies. You may not want to put the bulk ofyour money on it because it may be more volatile.”Despite the challenges and inconsistencies of ESG finance, Warmerdam says itdoes have the merit of pushing companies in the right direction.“It is a growing industry and it means that the companies are being pushed toimprove their practices on the ground, even if it is slightly indirect,” hesays.Banner image: Tapajós river basin, next to Sawré Muybu indigenous land, ishome to the Munduruku people, Pará state, Brazil. The Brazilian governmentplans to build 43 dams in the region. Photo via Greenpeace.tech companies in charleston scThere are a bunch of tech companies in Charleston. I know some of them, and Iwas curious to know what they do for a living.Tech companies are companies that produce software and hardware. So in myexperience, they mainly do two things: 1) work on software that is useful forthe job, and 2) do something that is innovative and useful. If you’re lookingfor an entrepreneurial experience, a tech company is not a bad place to start.Tech companies tend to create products that are useful. Think about your caror the computer you use to do your job. You dont need to do it for money. Itis usually because you need to do something that you couldnt accomplish withhand labor (or even a brain, as in case of the computer). And if youre lookingfor something that makes you stand out, a tech company is worth a look.There is no shortage of tech companies in charleston. There are dozens ofstartups in town and dozens of tech companies. In fact, there are so many,I’ve created a new category for these companies called “Startups inCharlevoose”. These companies don’t necessarily focus on a single field, sosome of them are focused on a single niche.Tech companies are often a great way to take your company to the next level.You can use them to expand your product line, find some new customers, orsimply give everyone in town something to talk about. There are many differenttypes and sizes of tech companies, but you want to make sure that youre usingyour company to do something that will genuinely make life better for otherpeople.I have been thinking about this for a while. From my experience, there are anumber of ways to make your company more impactful to your community. Thefirst thing that I have found is to increase your company’s market share. Whencompanies are competing with each other, they tend to focus on specificmarkets. If they can compete in one market in a specific way, they are morelikely to be successful.The problem is, many companies have a hard time doing this. There are so manydifferent types of markets that companies aren’t well-suited to compete in.For example, a company targeting the financial services industry wouldprobably do a lot better if they focused on financial services, rather thanthe healthcare industry. Instead, companies are more likely to focus on othertypes of markets that are likely to be more specific to their product.For example, Facebook is a company that focuses on social networking, ratherthan just people. The same is true for Google, which is more likely to be acompany that focuses on products, rather than just services. To be clear: Allcompanies are not the same. There are certainly companies that specialize inproducts, and there are companies that specialize in services.This is something I’ve noticed about companies. When I first started my careeras a marketing and communications consultant, I was always told to “thinkoutside the box.” That’s because it’s very rare to do something entirely newand different. It’s almost always been done in the same way.I think the problem is that its very difficult to do something entirelydifferent. For example, if I were to start my own marketing firm and focus onecommerce, I would certainly be working on the same things I do now. I justwould be focusing on different strategies and tactics.

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