JACK OTTER: THE BIDEN
ADMINISTRATION AND LEADERS NOT
SEEING EYE TO EYE ON ESG
INVESTIGATION.
THEY REVERSED A TRUMP ROLE IN RETIREMENT PLAN OFFERS.
RETIREMENT PLAN OFFERS.
THANKS FOR BEING ON THE SHOW.
LET’S EXPLAIN WHAT THEY ARE
ARGUING OVER, AND A CERTAIN
INVESTIGATION STRATEGY SHOULD
BE ALLOWED IN 401(K) PLANS.
>> TO INCLUDE FUNDS THAT
CONSIDER ESG IN THEIR
INVESTMENT DECISIONS AND ALLOWS
IT TO BE A DEFAULT OPTION
MEANING EMPLOYEES WOULD HAVE TO
OPT OUT AND CHOOSE ANOTHER FUND
BUT FOR PRACTICAL PURPOSES, NOT
MANY INCLUDE THESE FUNDS.
VANGUARD TELLS US IT IS 15% OF
PLANS.
JACK OTTER: ESG STANDS FOR
ENVIRONMENTAL, SOCIAL,
GOVERNANCE ISSUES THAT
INVESTORS, PORTFOLIO MANAGERS
THINK ABOUT WHEN COMPILING A
PORTFOLIO.
WHY IS THAT AN ISSUE HERE?
>> A LOT OF PEOPLE DON’T KNOW
WHAT ESG EVEN STANDS FOR.
WHAT IS ESG?
IT MEANS DIFFERENT THINGS TO
PEOPLE.
EASIER TO THINK OF IT AS RISK
MANAGEMENT.
HE ESG IS JUST DATA AND
ASSESSING RISK HAS ALWAYS BEEN
PART OF INVESTING.
INVESTORS WANT TO KNOW ABOUT
THINGS LIKE RISING SEA LEVELS
OR HOW IT COULD IMPACT THESE
OPERATIONS.
IT IS IMPORTANT TO STRESS THAT
ESG IS NOT THE SAME AS IMPACT
INVESTING.
THE GOAL IS TO MAKE MONEY BY
INVESTING IN COMPANIES WITH
POSITIVE IMPACT ON THE PLANET
OR SOCIETY.
JACK OTTER: A LOT OF PORTFOLIO
MANAGERS I TALKED TO DON’T
COUNT THEMSELVES AS ESG
INVESTORS, ENVIRONMENTAL ISSUES
AND GOVERNMENT ISSUES, IT CAN
BLOW UP IN A SHOCK.
NORFOLK SOUTHERN IS AN
ENVIRONMENTAL ISSUE, AND 3M IS
ANOTHER ONE THAT COMES TO MIND.
NO ONE KNOWS WHETHER IT WILL HAVE TO BE LIABLE FOR CLEANING
HAVE TO BE LIABLE FOR CLEANING
THIS UP.
WHETHER THEY COUNT THEMSELVES
UP AS ESG INVESTORS OR NOT.
CARLETON: TALKING ABOUT RISK
MITIGATION, THAT MAKES A LOT OF
SENSE TO ME.
HOW IS IT ESG IS SUCH A POLITICIZED ISSUE?
POLITICIZED ISSUE?
>> WE HEARD A LOT ABOUT ESG AND
WOKE CAPITALISM AND LAST YEAR,
FORMER VICE PRESIDENT MIKE
PENCE WROTE A SCATHING OP-ED
AGAINST ESG THAT SNOWBALLED
FROM THERE.
THE ISSUE IS THEY SAY THESE BIG
FINANCIAL FIRMS ARE ABUSING
THEIR POWER TO ADVANCE WHAT
THEY CALL A LIBERAL AGENDA ON
ISSUES LIKE DIVERSITY, SOCIAL
JUSTICE, ESPECIALLY CLIMATE
CHANGE.
TEXAS AND FLORIDA ARE AMONG THE
STATES, IN FLORIDA, GOVERNOR
RON SANTOS HAS BARRED STATE
PENSIONS FROM CONSIDERING ESG
FACTORS IN THEIR INVESTMENTS.
JACK HOUGH: WHATEVER THE AGENDA
OF ESG INVESTING, IS THIS A
STRATEGY THAT DOES AS WELL AS
THE MARKET?
WORSE?
BETTER?
>> BEFORE WE GO TO PERFORMANCE,
IT IS HARD TO DEFINE HOW ESG
INVESTING, ESG INVESTMENTS
BECAUSE OF CONCERNS OF
SOMETHING THAT IS MISLEADING
INVESTORS ABOUT THEIR PRACTICES
BUT ON PERFORMANCE, MORNINGSTAR
SAYS THE MOST SUSTAINABLE ONES
UNDERPERFORMED IN 2022, BUT
THAT IS NOT THAT SURPRISING IF
YOU CONSIDER MANY, OIL AND GAS
COMPANIES, AND LAST YEAR THE
ENERGY SECTOR WAS UP A
STAGGERING 66%.
I WILL NOTE THAT BARRON JUST
PUBLISHED ITS TOP ONE HUNDRED
SUSTAINABLE COMPANIES IN THE US
AND IN 2022, THE LIST MATCH THE
PERFORMANCE OF THE S&P 500
INDEX.
AND IN THE FOUR PRIOR YEARS,
OUTPERFORMED THE INDEX.
CARLETON: HOW ARE THESE ESG
FUNDS ADDRESSING THE BACKLASH
TO THE BACK LASH TO THE BACK
TO THE BACKLASH, HOWEVER YOU
WANT TO PUT THAT.
>> THE LEGISLATION IS FIZZLING
OUT.
JUST LAST MONTH, LAWMAKERS IN
WYOMING, WHICH IS A COAL RICH STATE.
STATE. AND THEY BOYCOTTED ENERGY
AND THEY BOYCOTTED ENERGY
COMPANIES, SOME PENSION FUNDS
SAY LEGISLATION, AND
>>
>> SOME DO REALLY WELL.
BUT JACK IS GOING TO SHARE HIS