The Responsible Investor
Recap of the 2024 US SIF Conference in Chicago
The 2024 US SIF Conference (US Sustainable Investing Forum), held in Chicago from June 25-26, brought together leaders of the sustainable investing community.
The event provided an opportunity to learn about new sustainable investing approaches, trends, and policy developments.
I was able to attend the two-day conference and visit some friends and family in the city during my free time. Here are some highlights from the conference.
Opening Keynote by Carlos Curbelo
The conference kicked off with a keynote speech by Carlos Curbelo, a former Republican Congressman from Florida known for his bipartisan approach. Here are some key points from his speech:
- Bipartisan Agreement on Climate and Energy Policy: Curbelo emphasized that Democrats and Republicans agree on climate and energy policy more than is often portrayed by the media. There is significant common ground between the two parties on this issue.
- Inflation Reduction Act (IRA) Protections: He suggested that the core parts of the IRA could remain in place, no matter who is elected president, highlighting the investments made in both red and blue states.
- Urban vs. Rural Divide: Curbelo pointed out the massive urban-rural divide in the country and noted that the IRA includes substantial investments in rural areas, which should help these communities benefit from the clean energy transition.
- Bipartisan Climate Caucus Growth: He mentioned that the bipartisan Climate Caucus saw the most growth in 2016 and may grow again.
In 2022, there was a sharp reversal due to higher interest rates, and Value stocks vastly outperformed Growth stocks in that
Panel on Inflation Reduction Act and Clean Energy Investments
One of the notable panel discussions focused on how funds from the IRA are being deployed in clean energy investments. Key takeaways included:
- Greenhouse Gas Reduction Fund: The IRA established the Greenhouse Gas Reduction Fund, a $27 billion investment to mobilize financing and private capital for the clean energy transition, marking the largest clean energy investment in U.S. history.
- Global Investment Needs: To meet the Paris Agreement Climate Goals by 2030, an estimated $8 trillion to $9 trillion needs to be invested globally on an annual basis towards clean energy.
- Role of Private Wealth: Government funding is only a small piece of the puzzle, with significant private capital flowing into the energy transition.
Builders Vision's Impact Investing
The Chief Investment Officer from Builders Vision gave an insightful presentation on the firm's work in funding impact investments. Builders Vision, founded by Lukas Walton (grandson of Sam Walton—one of the world's wealthiest families), focuses on three core areas: Oceans, Food and Agriculture, and Energy. Builders Vision is an impact investing platform that helps private capital fund various impact investments in those core areas.
AI and Its Implications
A well-attended session at the conference explored the role of Artificial Intelligence (AI) in business. Notably, over 40% of S&P 500 companies have AI as part of their business plan, even if they aren't traditional tech companies. The panel highlighted the need for regulations and transparency in AI development to ensure ethical practices and accountability. Shareholders can contribute to this accountability by requiring companies to establish policies and procedures around the responsible development of AI and requesting the disclosure of data to ensure they adhere to these policies.
ESG Ratings and Stock Performance
A panel discussed a research paper from UC Berkeley examining the correlation between ESG ratings and stock performance. Key findings included:
- No Conclusive Evidence of Superior Returns: The researchers found no conclusive evidence that portfolios based on raw ESG scores deliver superior returns above the market. They also found no evidence that ESG scores detracted from performance either.
- Material ESG Scores: Instead of focusing on raw ESG scores, the researchers looked at ESG scores material to specific stocks or industries but still found no causation between improving ESG scores and better stock performance.
ESG Data Accuracy
A VP from CSX shared an instance where their social score decreased due to a train crash involving a drunk driver despite the railroad not being at fault. This incident highlighted the importance of accurate ESG data and the potential for misinterpretation by third-party rating agencies.
Indigenous Rights and Critical Mineral Mining
The conference also addressed the issue of critical mineral mining's impact on indigenous people's rights. With nearly 80% of critical minerals in the U.S. located on or near tribal lands, shareholders were encouraged to advocate for mining companies to respect indigenous communities' rights through engagement and policy creation. Too often companies disregard these communities and violent conflict is a result.
The 2024 US SIF Conference was a valuable platform for discussing the future of sustainable investing, highlighting both challenges and opportunities in the field. The insights shared by speakers and panelists underscored the importance of collaboration, transparency, and ethical practices in driving the clean energy transition and achieving sustainable investment goals.
Learn more about Derek Van Calligan
Hello! I’m Derek, a wealth advisor and director of investment research at Allodium Investment Consultants, located in Minneapolis, MN. I am passionate about helping individuals and families build holistic financial plans to help them reach their goals. When I’m not helping our clients make investment decisions, I enjoy spending time in the mountains in Colorado—skiing, fishing and hunting with my wife, Kelly, and my dog, Hank. I am also an active church member and volunteer at Big Brothers Big Sisters and Junior Achievement.
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