#Morningstar subsidiary Sustainalytics

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Republican senators urge Commerce Department to address Morningstar’s alleged BDS practices

Republican senators urge Commerce Department to address Morningstar’s alleged BDS practices

The senators claim that the “implicit advocacy” of Morningstar subsidiary Sustainalytics borders on a boycott of Israel as defined by federal law. (September 30, 2022 / JNS) A pair of Republican senators are calling on the U.S. commerce secretary to address what critics cite as BDS practices by Chicago-based investment firm Morningstar and its subsidiary, Sustainalytics. Sens. Ted Cruz (R-Texas)…

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Florida - Morningstar-Sustainalytics - Scrutinized

Florida Places Morningstar-Sustainalytics on List of Scrutinized Companies that Boycott Israel Morningstar-Sustainalytics has 90 days to cease or clarify business practices or will be subject to Florida’s divestment and contract prohibitions. TALLAHASSEE, FL (STL.News) Florida Governor Ron DeSantis was joined by Attorney General Ashley Moody and CFO Jimmy Patronis to place Morningstar-Sustainalytics on Florida’s List of Scrutinized Companies that Boycott Israel after being placed under continued examination by the State Board of Administration (SBA) since August.  The listing comes as a result of Morningstar-Sustainalytics application of their controversial research methodology, which categorizes companies as a risk for supporting Israeli interests in Judea and Samaria. “Florida will hold companies accountable for discriminating against Israel,” said Governor Ron DeSantis.  “We will continue to invest in companies that provide Floridians with the best return on investment and not companies that utilize arbitrary ESG metrics to advance a BDS agenda.” “Our actions on Morningstar-Sustainalytics should put the rest of the world on notice,” said Attorney General Ashley Moody.  “Florida will not stand by while companies use their economic power to attack Israel.” “I’m proud to stand with Governor DeSantis in adding Morningstar to Florida’s list of companies under scrutiny for boycott and divestment of Israel,” said Chief Financial Officer Jimmy Patronis. “It’s shameful how the virus of hateful, Palestine-led BDS practices has infected corporations and financial markets, and Florida stands committed to fighting these anti-Israel policies.  Following the heinous and unprecedented attacks by terrorists against Israel, Jewish and Israeli Floridians need our support now more than ever.  Let me be clear – If you want to do business with the State of Florida, you cannot support BDS policies against Israel, or you will face the consequences.” In May, the Governor signed legislation to increase the state’s investment prohibitions to also require the divestment of holdings in companies that boycott Israel.  Today’s actions represent the first divestment following the enactment of the law. As of result of today’s actions by the Trustees of the SBA, the SBA will formally notify Morningstar-Sustainalytics of their placement on the Scrutinized Companies that Boycott Israel List.  If a company does not clarify its business practices or ceases its boycott of Israel within 90 days of being placed on the list, it becomes subject to a divestment investment prohibition, and the State of Florida will not contract with the company or its subsidiaries. Today’s actions build on prior actions of Governor DeSantis and his fellow SBA Trustees in protecting Florida’s investments from corporations supporting the boycott, divestment, and sanction movement against Israel, including placing Airbnb on the list in January 2019.  The actions resulted in the company reversing course on discriminatory policies targeting Israeli communities in Judea and Samaria.  In 2021, the Governor and his fellow SBA Trustees placed Ben & Jerry’s parent company, Unilever, on the list for their boycott against selling products in Judea and Samaria, prohibiting Florida’s continued investment in the company. SOURCE: Florida Governor Read the full article

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PODCAST: New ESG Ratings Help for Investors. And More…

Big developments in new ESG ratings help for investors – from global leaders MSCI and Morningstar! What are the best renewable energy stocks with reliable dividends? A new day dawns in solar industry stocks as they rise. Will nuclear energy stocks gain traction? State Street launches ETF that screens S&P 500 for ESG exclusions. And more

PODCAST: New ESG Ratings Help for Investors. And More…

Transcript & Links, Episode 20, December 6, 2019

Hello, Ron Robins here. Welcome to podcast episode 20 titled New ESG Rating Help for Investors. And More… for December 6, 2019—presented by Investing for the Soul. investingforthesoul.com is your site for vital global ethical and sustainable investing news, commentary, information, and resources.

And, Google any terms that are unfamiliar to you.

Also, you can find a full transcript, live links to content, and often bonus material to these podcasts at their episodes’ podcast page located at investingforthesoul.com/podcasts.

Please note that in my next podcast on December 20, I’m going to make a really special offer to you!

Now to this podcast!

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New ESG Ratings Help for Investors (1)

To kick-off, I want to talk to you about some big developments on the ESG company rating’s front that can greatly help you in evaluating investments.

The first is from MSCI which has developed – and made available for free to all investors – an online tool that shows their ESG ratings “[Of] 7,500 companies (13,500 issuers including subsidiaries) and more than 650,000 equity and fixed income securities globally as of October 2019” according to MSCI’s website.

It’s an impressive ESG company rating platform that you should really make use of.

The second and equally impressive change is the revamped Morningstar Sustainability Rating for funds. Morningstar’s Jon Hale explains that “The enhanced version differs from its predecessor in three ways: First, it is focused on material ESG risk, rather than on a broader array of ESG issues, some of which may not be financially material to investors. Second, company ESG risks can now be compared across industries, rather than only within industry peer groups. And third--the new rating is simple and transparent, no longer requiring a complicated calculation.” End quote.

New ESG Ratings Help for Investors (2)

By the way, material ESG risk simply means risk relevant to a company’s financial performance.

The Morningstar ESG fund ratings are developed from the more granular company ESG ratings provided by one of the real pioneers and a global leader’s in this space – and that is Sustainalytics.

These new ESG ratings help should provide a boon to investors!

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3 Renewable-Energy Dividend Stocks to Buy Today

A frequent financial writer appearing in these podcasts recommending renewable energy stocks is Travis Hoium who publishes on the Motley Fool site. In a post titled 3 Renewable-Energy Dividend Stocks to Buy Today he describes why some renewable energy dividend-paying stocks have disappointed and then recommends a particular threesome.

He writes that “Renewable energy stocks that pay a dividend have been hit or miss for investors in the last few years. Many renewable energy asset owners haven't performed as well as expected because they lacked a pipeline of projects that would keep the dividend growing year after year, leading them to sell their businesses to large investors. 

Ironically, the renewable energy asset owners that remain are in a better position than their predecessors because they have a smaller pool of competitors looking to buy projects and a project pipeline strategy that has worked for years. Today, the three renewable energy dividends that I think are still worth owning are from NextEra Energy Partners (NYSE:NEP), Hannon Armstrong (NYSE:HASI), and Brookfield Renewable Partners (NYSE:BEP).” End quote.

Go to his article for his reasons for these three.

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3 Solar Stocks to Buy for a New Day in Solar Energy

Continuing on the renewable energy theme, Larry Ramer, an InvestorPlace contributor has some solar stock picks in his post titled 3 Solar Stocks to Buy for a New Day in Solar Energy.

Regular listeners to these podcasts will be familiar with two of his picks: JinkoSolar (NYSE:JKS) and SunPower (NASDAQ:SPWR). His third choice is Daqo New Energy (NYSE:DQ).

About these stocks he says that “Solar stocks have really taken it on the chin this year, but the huge declines are totally unjustified, creating a great buying opportunity for longer-term investors. And the recovery could be underway, JunkoSolar stock has added 7% YTD, SunPower stock has added 42% and Daqo stock has added a whopping 60% after a dismal 2018.

The catalyst for the retreat of solar stocks appears to have been a decision by the Federal Energy Regulatory Commission to eliminate ‘a requirement for utilities to offer long-term fixed prices for qualifying facilities.’” End quote.

However, when you read Mr. Ramer’s article he makes it clear that that the Federal Energy Regulatory Commission’s decision would only affect a small number of solar projects underway today. Hence, the market’s new upward reassessment of many solar renewable energy stocks.

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5 Renewable Stocks To Watch In 2020

And we have more on renewable stock recommendations from an unusual source and with some equally unusual picks. It’s by Anes Alic writing on the oilprice.com site. Her article is 5 Renewable Stocks To Watch In 2020.

Ms. Alic writes about her five stocks as follows:

“1) NextEra Energy Inc. (NYSE:NEE) [as distinct from NextEra Energy Partners] is a Florida-based clean energy company and America’s largest electric utility holding company by market cap. NEE is the world’s largest producer of wind and solar energy.

2) Cosan S.A. (NYSE:CZZ) is a Brazil-based biofuels conglomerate with operations across South America and the U.K. Cosan has interests in the bioethanol space, among other energy projects. The company generates 940 MW of sugarcane bioethanol through its Raízen Energia arm, placing it among the leading producers of bioenergy.

3) JinkoSolar Holdings Co. (NYSE:JKS) [second time recommended in this episode] is the largest PV module manufacturer in the world, with a 12.8% slice of the market. Headquartered in Shanghai, China, the company shipped a record 11.4 GW of modules in 2018 and is on course to exceed that in the current year.

4) Vestas Wind Systems (OTCPK:VWDRY) is the world’s largest wind power company, responsible for more wind turbine installations than any other company, estimated at around 68,000 turbines in 80 countries.

And,

5) MKS Instruments Inc. (NASDAQ:MKSI) While nuclear energy has been gradually falling out of favor as evidenced by shrinking investments, that does not mean that investing in the sector has stopped being profitable. One company that has been defying the odds is MKS Instruments Inc.

The company manufactures a variety of nuclear fuel processing, nuclear accelerator, and uranium conversion systems… [and] holds 600 nuclear-related patents.

In discussing the future for nuclear power Ms. Alic writes that “Nuclear power is presently classified as a sustainable energy source; however, it could become completely renewable if the uranium source changed from mined ore to seawater. Since the uranium mined from seawater is replenished continuously through a geologic process, nuclear energy would become as renewable as wind and solar.” End quote.

Incidentally, some leading environmentalists advocate nuclear energy. Anyhow, I’m on the sidelines of this debate and I’ll leave it to those much more knowledgeable than me to decide on that.

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State Street launches ETF that screens S&P 500 for ESG exclusions

Moving away from energy, I’d like to talk about one new and unique ESG ETF and that is State Street Global Advisors’ SPDR S&P 500 ESG Screened Ucits ETF. In an article titled State Street launches ETF that screens S&P 500 for ESG exclusions by Jessica Beard, she says that “The SPDR S&P 500 ESG Screened Ucits ETF will track the newly-launched S&P 500 ESG Exclusions II Index. The index methodology has been devised to exclude companies based on data from independent provider of ESG research and ratings, Sustainalytics.”

End of quote, but quoting further, Ms. Beard adds that, ”The exclusion-based approach eliminates exposure to controversial weapons, civilian firearms, tobacco and thermal coal, as well as companies that do not comply with the principles of the UN Global Compact.” End quote.

It wasn’t too long ago that most ethical and sustainable investors employed only negative screens – screening out industries and companies they disliked. Remember ESG criteria today generally does not concern itself with the actual product or services a company produces, but usually only refers to the way a company functions.

Hence, this new State Street ETF should help fulfill a clear need.

Also, it is based on the S&P 500 ESG Screened Index is a great plus.

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Well, these are my top news stories and tips for ethical and sustainable investors over the past two weeks.

Again, to get all the links or to read the transcript of this podcast and sometimes get additional information too, please go to investingforthesoul.com/podcasts and scroll down to this episode.

And be sure to click the like and subscribe buttons in iTunes/Apple Podcasts or wherever you download or listen to this podcast and please click the share buttons to share this podcast with your friends and family. That way you can help promote not only this podcast but ethical and sustainable investing globally and help create a better world for us all.

Please don’t hesitate to contact me if you have any questions about the content of this podcast or anything else related.

Thank you for listening.

Now my next podcast is scheduled for December 20 and as I mentioned I’m going to make a really special offer to you in that episode! So be sure to listen!

Bye for now.

© 2019 Ron Robins, Investing for the Soul.

Click here to download the episode

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Arizona treasurer says investment firm Morningstar violates state anti-BDS law

Arizona treasurer says investment firm Morningstar violates state anti-BDS law

Significant changes are needed in how Morningstar’s subsidiary Sustainalytics rates companies doing business in Israel and Judea and Samaria, writes the treasurer to Morningstar’s CEO. BY MIKE WAGENHEIM (August 24, 2022 / JNS) Arizona’s state treasurer put investment firm Morningstar on notice that it is violating the state’s anti-BDS law. Last week, Arizona State Treasurer Kimberly Yee wrote…

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PODCAST: Kellogg’s ‘Beyond Meat,’ ESG Stock Tips, Ethical Pot Companies

(Note: my next podcast is August 2.) Kellogg has the most successful vegie burger, pressure begins for IPO. More ESG stock, fund, and portfolio tips. Abandon GE, buy Schneider Electric, says Tim Nash in his stock challenge. Pot companies plan to adopt ESG as they strive to be seen as responsible, ethical, and sustainable investments.

PODCAST: Kellogg’s ‘Beyond Meat,’ ESG Stock Tips, Ethical Pot Companies

Transcript & Links July 5, 2019

Hello, Ron Robins here. Welcome to my podcast Ethical & Sustainable Investing News to Profit By! for July 5, 2019—presented by Investing for the Soul. investingforthesoul.com is your site for vital global ethical and sustainable investing information and resources. Please note that due to holidays my next podcast will be on August 2.

Now to this podcast. And, Google any terms that are unfamiliar to you.

Also, you can find a full transcript, live links and bonus material to this podcast at this edition's podcast page located at investingforthesoul.com/podcasts

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Hey, about the continuing saga of Beyond Meat. Its stock as of this writing is still holding well over $150 s share.

Well, it seems that Brett Arends writing in MarketWatch has found that Kellogg has its own successful Beyond Meat competitor under the guise of its subsidiary MorningStar Farms -- and it’s going under the radar of everyone!

In an article titled, Kellogg is sitting on a ‘fake meat’ gold mine bigger than Beyond Meat, Brett argues that Kellogg, whose stock price has been struggling for years, should take MorningStar Farms public and might well become even more valuable than Beyond Meat.

Quoting Brett, he says, that, “Kellogg already owns the largest single ‘fake meat’ operation in the country in MorningStar Farms, a brand that has been around since the 1970s. [and he says] Where’s its IPO?”

Continuing, Brett states, that, “I tried MorningStar’s ‘Grillers’ vegetarian burgers not long ago, on the recommendation of some friends. Frankly, I found them way better than Beyond Meat’s ‘Beyond Burgers’ and not obviously worse than the so-called ‘Impossible Burger’ that people are raving about. Close quote.

Brett says that Kellogg won’t break out the annual sales figures for MorningStar Farms—though he believes they could be around $450 million and that compares with $290 million for Beyond Meat’s 2019 sales estimate!

So, will Kellogg spin-off MorningStar Farms and do an IPO? Who knows but Sustainalytics gives Kellogg an ESG rating of 65—putting it in the 81st percentile of its peers and Reuters says analysts following the stock presently rate it as a hold. So, something you might consider.

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Barron’s the US investment daily paper recently published a piece by Karen Hube titled, How to Build Your Own ESG Portfolio. She says all the right things, such as the following, quoting her, "By putting your savings in funds that assess how a company is addressing (or worsening) environmental, social, and governance, or ESG, factors, you hitch your investments to good corporate citizens, and may earn above-average returns. But turning the concept into a practical investment portfolio without compromising on investing mandates such as diversification and due diligence comes with a unique set of challenges." End quote

So, some great points are made in her article, but her portfolio appears overly diversified to me. Statistically, having more than fifteen stocks in diversified industries across regions will give you very little extra statistical benefit. Also, no-doubt it'll include sectors and companies that won't please you!

Along similar lines, John Eade of Argus Research Group published their sustainable stock recommendations in a post, An Argus Research Portfolio for Sustainable Impact Stocks which appeared in Money Show. John likes: Alphabet Inc. (GOOGL: OQ), Ecolab Inc. (ECL: NYSE), Johnson & Johnson (JNJ: NYSE), JPMorgan Chase & Co. (JPM: NYSE), McDonald’s Corp. (MCD: NYSE), Microsoft Corp. (MSFT: N), Norfolk Southern Corp. (NSC: NYSE) and a few more that you can see by clicking the link in the transcript for this podcast.

Again, if you have or are interested in creating a portfolio of profitable individual stocks that reflect your values, learn how to do it properly and systematically in my one-hour DIY Ethical-Sustainable Investing Pays Tutorial. Take a few seconds to check it out! Go to investingforthesoul.com/podcasts and look down the right-hand sidebar.

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In speaking of portfolio diversification, heavy industry is not a sector that as an ethical and sustainable investor you might consider. Nonetheless, you can’t escape the necessity for it in our society and it can have a place in your portfolio too. So, in Tim Nash’s sustainable stock showdown pulls plug on GE, he compares General Electric (GE: NYSE) with Schneider Electric (SGBSY: OTC).

GE has been in the doldrums for several years. Tim says about GE, that, “GE was a great investment throughout the 20th century, but lacking a clear forward-looking strategy to transition into a low-carbon future, it’s no wonder that sustainable investors are turning out the lights on GE shares.” End quote

Concerning Schneider Electric, Tim says, that, “Schneider Electric is a French energy management company making hardware and software that helps companies improve their energy efficiency… Schneider Electric at #60 on the 2019 Corporate Knights Global 100 Most Sustainable Corporations in the World list, and #13 on the 2019 Corporate Knights and As You Sow Clean200 list.”

Finally, he says, “If you want to keep the lights on sustainably in the 2000s, forget GE. Schneider Electric is a better investment.”

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Yet another new low-cost ESG ETF has been launched. It’s the Xtrackers S&P 500 ESG ETF (NYSE: SNPE). What’s special about this ESG ETF is that it tracks the new S&P 500 ESG Index. According to Todd Shriber at Benzinga in a post, Another Cheap ESG ETF is Here, Todd writes, that, the “S&P Dow Jones launched the index earlier this year and its approach to ESG investing is traditional in that it excludes tobacco companies, civilian firearms manufacturers and companies with low scores based on the United Nations Global Compact for responsible business…

Continuing the quote, Todd says that, “The new SNPE allocates over 27% of its weight to the technology sector and a combined 28.23% of its weight to the health care and consumer discretionary sectors. SNPE is home to 319 stocks. The financial services and industrial sectors combine for over 20% of the fund's weight.”

Now earlier I brought up the subject of over-diversification and here I’m concerned that like most other general ESG ETFs they tend to under diversify into a few key sectors—and so, for instance, when tech, health care, and financials do well, they thrive. Since these sectors have done so well in the past decade, portfolios that are heavily weighted in those sectors have generally outperformed.

However, with trade frictions, anti-monopolistic sentiments and governments potentially further regulating health care costs and privacy concerns coming to the fore, it’s possible that stock market leadership might rotate to other market sectors.

From another perspective that also relates in a way to diversification, is a protestation by James Gard in a Morningstar UK article. In it, he argues to be a little ‘looser’ in not being too strict in only including top ESG rated companies in your portfolio. His article is titled, Should ESG Funds Buy "Bad" Companies? James makes a point that, quote, “Investors who shun such firms may miss out if these efforts pay off in the long-term.”

James further quotes Jon Hale, also of Morningstar, as follows, “Wouldn't another investor come along to take the place of the ‘responsible’ investor? And if enough investors shun a company's stock, it could become undervalued and end up outperforming for those who don't have any problem investing in it.” And by the time that happens, that poor performing ESG stock could become a leading ESG stock with great stock price gains that you would’ve missed out on. So that’s the argument for loosening your ESG stock screening.

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Incidentally, terrific price gains have been made with pot stocks in recent years. But can they be worthy investments for ethical and sustainable investors? That’s a complicated question. Besides the personal values issues for you, you might’ve wondered if pot companies can do well with ESG issues?

Well, the pot industry is aiming to create its own ESG standards. Kristine Owram, writing in a Bloomberg article titled, Pot Firms Seek to Transition From Sin Stocks to Ethical Darlings, says, that, and I quote, "A group of 45 companies operating in the cannabis industry has crafted a set of standards that they hope could one day transform them from sin stocks into ESG darlings."

This will be fascinating to watch! Can pot companies be sold as health producing ESG focused entities to institutional investors? For a great review of the pot industry from an ESG perspective see the Sustainalytics post and report, ESG Risks of Cannabis Cultivation: Energy, Emissions and Pesticides.

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So, these are my top news stories and tips for ethical and sustainable investors over the past two weeks.

Again, to get all the links or to read the transcript of this podcast and sometimes get additional information too, please go to investingforthesoul.com/podcasts and scroll down for this edition.

And be sure to click the like and subscribe buttons in iTunes or wherever you listen to this podcast. That way you can help promote not only this podcast but ethical and sustainable investing globally.

And remember, I’m here to help you grow in your investment success—and investing in opportunities that reflect your personal values!

Please don’t hesitate to contact me if you have any questions about the content of this podcast or anything else investment related. I can’t say I’ll have all the answers for you and some answers I can’t give due to licensing restrictions. But where I can help I will.

Now, a big thank you for listening—and please click the share buttons to share this podcast with your friends and family.

Come again! And as I mentioned, my next podcast is scheduled for August 2. Yes, I’m taking a break. Talk to you then. Bye for now.

Check out this episode!