Why Commodities Are Finding Their Way into ESG Por
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Posted On: 09/04/2024 5:17:24 PM
Why Commodities Are Finding Their Way into ESG Portfolios
A recently conducted analysis has determined that more fund managers are including mining, gas and oil stocks in portfolios registered as environmental, social and governance (ESG). The analysis was carried out by Goldman Sachs Group Inc., with investigators examining funds registered under the Sustainable Finance Disclosure Regulation. This is the largest ESG investing rulebook globally and is focused on improving the comparability and clarity of sustainability disclosures.
This regulation classifies sustainable funds into two: the strictest (Article 9) and the broadest (Article
. The investigators found that in comparison to 12 months ago, fund managers were generally more exposed to mining, gas and oil stocks now.
Under Article 8, 51% of funds now hold at least one gas and oil company. This is an increase from the 47% recorded 12 months ago. It is estimated that this category covers more than $7 trillion of assets. With regard to metals and mining, the analysis discovered that 32% of funds under Article 9 held at least one company in the industry, representing a more than 5% increase from figures recorded in 2023. The equivalent figure for Article 8 funds is 46%.
The analysis also discovered that in the first half of this year, outflows from funds under Article 9 and 8 hit $17 billion. This is in comparison with inflows valued at $68 billion for funds under Article 6.
Analysts explained that in the months of May and June, funds under Article 8 and 9 had recorded modest inflows, which showed improvement. These findings are different from what’s been observed in the bond market, with nonsustainable funds generating $75 billion of inflows while sustainable fixed-income funds generated $115 billion of the same.
In their report, Goldman analysts Grace Chen and Evan Tylenda revealed that they had observed a willingness to own metals and mining funds, adding that there was evidence that the ownership of gas and oil stocks by ESG funds had grown slightly.
Following a lengthy consultation period, the Sustainable Finance Disclosure Regulation is currently undergoing an overhaul that will help open up transition investing. This basically means that fund managers will be able to hold assets that were formerly controversial, if they can demonstrate that owning these assets is improve their holdings’ ESG profile.
Goldman analysts believe that changes in the regulatory backdrop of ESG in Europe will help drive flows toward companies normally excluded in this market by improving the mainstreaming of transition funds.
This growing inclusion of commodities in the portfolios of funds championing sustainability could soon include extractive companies such as Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF), given the increasing rate at which such companies are embracing ESG.
NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF
Please see full terms of use and disclaimers on the ESGWireNews website applicable to all content provided by ESG, wherever published or re-published: https://www.ESGWireNews.com/Disclaimer
A recently conducted analysis has determined that more fund managers are including mining, gas and oil stocks in portfolios registered as environmental, social and governance (ESG). The analysis was carried out by Goldman Sachs Group Inc., with investigators examining funds registered under the Sustainable Finance Disclosure Regulation. This is the largest ESG investing rulebook globally and is focused on improving the comparability and clarity of sustainability disclosures.
This regulation classifies sustainable funds into two: the strictest (Article 9) and the broadest (Article
. The investigators found that in comparison to 12 months ago, fund managers were generally more exposed to mining, gas and oil stocks now. Under Article 8, 51% of funds now hold at least one gas and oil company. This is an increase from the 47% recorded 12 months ago. It is estimated that this category covers more than $7 trillion of assets. With regard to metals and mining, the analysis discovered that 32% of funds under Article 9 held at least one company in the industry, representing a more than 5% increase from figures recorded in 2023. The equivalent figure for Article 8 funds is 46%.
The analysis also discovered that in the first half of this year, outflows from funds under Article 9 and 8 hit $17 billion. This is in comparison with inflows valued at $68 billion for funds under Article 6.
Analysts explained that in the months of May and June, funds under Article 8 and 9 had recorded modest inflows, which showed improvement. These findings are different from what’s been observed in the bond market, with nonsustainable funds generating $75 billion of inflows while sustainable fixed-income funds generated $115 billion of the same.
In their report, Goldman analysts Grace Chen and Evan Tylenda revealed that they had observed a willingness to own metals and mining funds, adding that there was evidence that the ownership of gas and oil stocks by ESG funds had grown slightly.
Following a lengthy consultation period, the Sustainable Finance Disclosure Regulation is currently undergoing an overhaul that will help open up transition investing. This basically means that fund managers will be able to hold assets that were formerly controversial, if they can demonstrate that owning these assets is improve their holdings’ ESG profile.
Goldman analysts believe that changes in the regulatory backdrop of ESG in Europe will help drive flows toward companies normally excluded in this market by improving the mainstreaming of transition funds.
This growing inclusion of commodities in the portfolios of funds championing sustainability could soon include extractive companies such as Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF), given the increasing rate at which such companies are embracing ESG.
NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF
Please see full terms of use and disclaimers on the ESGWireNews website applicable to all content provided by ESG, wherever published or re-published: https://www.ESGWireNews.com/Disclaimer
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