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VBDO: Biodiversity and Business - Challenges and good practices 

The past five decades have seen a rapid deterioration in our global ecosystems. Research by the UN Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), shows that biodiversity is under enormous pressure from human activities. The WWF Living Planet Report describes that one million species – out of an estimated eight million in total – are threatened with extinction.

Most companies have taken action to reduce their impact on biodiversity, but at the same time are struggling to find the right approach, the report notes. From the interviews conducted, this is mostly due to the complexity of the subject: there are many different factors involved in effectively reducing negative impacts on biodiversity. For instance, the focus is usually on climate change, while four other causes need at least as much attention, such as countering pollution and the spread of invasive plant and animal species.

Good practice instead of best practice

The report stresses that it is crucial for companies to be aware of their impacts and to understand the dependencies within their business models. In this way, they can make changes appropriate to their operations and the areas in which they operate

Looking back two years, can you still remember the shortage of numerous products towards the end of the pandemic? Consumers were facing shortfalls of products ranging from televisions and cellphones to cars, WiFi routers, medical devices and gaming consoles, among many other things. A central reason was a global shortage of semiconductors, also known as microchips and integrated circuits, mainly due to the effects of the Corona crisis causing disruptions in the supply chain.

The shortage of semiconductors had a serious impact on industrial companies worldwide. The automotive industry was hit hardest: production lines been stopped, employees were put on short-time work, new cars had an analogue speedometer instead of a digital version or had to do without certain assistance systems. But a lack of microprocessors didn’t hit only the automotive industry hard. Goldman Sachs identified 169 industries that suffered from the ongoing chip shortage.

Digitalization and therefore microelectronics are moving into all areas of life. With their diverse areas of application, semiconductors play a central role in the materials of electronics and energy technology.

Semiconductor chips are incredibly complex. State-of-the-art devices can contain over one billion circuit elements. There is simply no way to manage this level of complexity without sophisticated automation. Electronic Design Automation (EDA) provides this critical technology.

In this industry with high relevance to the global economy, US company Cadence Design Systems is one of the largest provider of EDA technology with a market share of 30% while dominating the analog design part of the market with around 70% share.

The world is drowning in garbage. At least that’s the impression you might get if you look at the forecasts for the projected global increase in waste: For 2050, the World Bank predicts a growth in the annual global waste generation from the current around 2 billion to 3.4 billion tons – an increase of around 70%. This represents more than double the population growth over the same period.

Worldwide, only 14% of waste gets a “second life”. Much of what cannot be recycled is burned to generate energy. The problem is that this increases global carbon dioxide emissions and is therefore harmful to both humans and the climate.

GFL Environmental – Waste is their business

GFL Environmental is one of the top 5 waste management companies in North America. With a compound annual revenue growth rate of 32% over the past five years, GFL has become the fastest-growing U.S.-listed municipal waste management company. 

• The EU Green Deal is alive and well, but successful implementation requires an integrated economic narrative
• Fierce global competition in many clean and transition techs reveals uncomfortable lessons for EU green industrial policy
• In our view, getting policy right could reduce the cost of capital while increasing investment returns and growth

Clients of HSBC Global Research can access the full report via the HSBC Global Research website or by contacting Wai-Shin Chan

Contrary to popular opinion, the Green Deal is alive and well. Despite some watering down and political surprises - to be expected ahead of elections - it continues to provide a strong foundation to achieve Europe's 2030 climate targets.

However, we think a shift in narrative and mindset is needed to implement it successfully post June's EU Parliamentary elections. Examining climate policy in a silo and imposing this on the economy will no longer work. Green Deal implementation needs to start with consideration of socio-economic factors first, including rapidly shifting geopolitics, changing trade flows, monetary and fiscal policy, changing industrial competitiveness, and so on, and then fully integrate green.

In our view, this approach could reduce the risks of pushback and a stop-start transition, which would be detrimental to corporate value and investment returns.

• What are companies saying about ESG? We apply our bespoke natural language processing model to corporate earnings calls
• Mentions of the term "ESG" have fallen to almost zero in the US amid pushback; Europe and LatAm still use the term...
• ...but whether they say the word "ESG" or not, companies continue to comment on related themes

Clients of HSBC Global Research can access the full report via the HSBC Global Research website or by contacting Wai-Shin Chan

Is ‘engagement washing’ poised to be the next term maligning asset management’s ESG movement?

Institutional investors often engage with companies they invest in to improve those companies’ environmental, social and governance practices— rivalling capital allocation as a core mechanism for achieving sustainable investment outcomes. But do engagement activities really deliver impactful, positive, real-world outcomes?

As a growing number of institutional investors make ambitious sustainability commitments, the volume of engagement activity reports grows with them. Company interactions on sustainability topics are commonplace, the range of engagement themes has widened, and goals have become loftier. Meanwhile codes of best practices are evolving to encourage a focus on real-world outcomes in engagement reporting, in contrast to the investment outcome focus of just a few years ago.

Yet, there is a growing realisation – and genuine bewilderment – that engagement for positive sustainability outcomes is not living up to the expectations of its proponents. When it comes to mitigating the negative impacts of certain economic activities on our environment and society, engagement can be influential, but it is rarely transformational—and an engagement expectation gap is emerging.

Gender lens investing offers investors a process for identifying and weighing issues pertaining to gender-based issues — pay equity, gender diversity, and career advancement, to name a few. Zevin AM integrate these findings into their investment decision-making with the goal of mitigating risk, identifying opportunities, and creating positive social impact.  

Only about 12.5% of portfolio managers across U.S.-based funds in 2022 were women, almost unchanged from the previous ten years, according to Morningstar. The financial services industry has historically been unwelcoming to women given toxic working environments stemming from a culture of bullying, misogyny, and sexual harassment. Changing that culture is one aspect of Zevin's approach to gender lens investing.  

Gender lens investing includes supporting shareholder proposals that seek to expand disclosure of workforce diversity or to improve or adopt policies that promote an inclusive workplace. Zevin AM believe shareholder requests for improving workforce diver sity, equity and inclusion (DEI) position a company for long-term success. 

Experian: Sustainability & SDG contribution roadshow (for investors & analysts) (21 May | 10 & 13 June | 31 July)

Experian’s sustainability-focused investor roadshows this year will focus on how their innovative products help improve the financial health of millions of people around the world and support financial inclusion for underserved and diverse populations. It will also introduce their new positive social impact framework which will be used in future to quantify how many people their products are helping thrive on their financial journey.

Sustainable investors and SRI/ESG analysts are invited to join meetings with company management to discuss:

• an update on the company’s products and programmes for financial health which contribute to UN SDGs 1, 8 & 9.  (No poverty; Decent work & economic growth; Industry, innovation & infrastructure).
• an introduction to the new positive social impact framework
• wider aspects of the company’s ESG strategy and performance.

Analysts and investors to join the following events on Experian’s regular sustainability / ESG roadshow:

• Briefing call for ESG ratings agency analysts (Tues 21 May & 15:00 (London))
  • Company participants: Evelyne Bull (Director, Investor Relations) & Melissa Goncalves Ferreira (Global Head of Sustainability)
  • RSVP via SRI-Connect here or This email address is being protected from spambots. You need JavaScript enabled to view it.
• 1-on-1 and small group meetings for investors (10th and 12th June)
  • Company participants: Evelyne Bull, Charlie Brown (Company Secretary), Abigail Lovell (Chief Sustainability Officer), Melissa Goncalves Ferreira
  • RSVP This email address is being protected from spambots. You need JavaScript enabled to view it.
• Briefing call for ‘sell-side’ sustainability analysts Weds 31 July 15:00 (London))
  • Company participants: Evelyne Bull, Nadia Ridout-Jamieson (Chief Communications Officer), Charlie Brown
  • RSVP via SRI-Connect here or This email address is being protected from spambots. You need JavaScript enabled to view it.

This briefing should be of interest and relevance to:

• ESG research and ratings analysts covering the company and also to
• analysts responsible for identifying sustainability thematic opportunities – notably social thematic opportunities and those related to the UN Sustainable Development Goals.

• As the world continues to warm, the focus on clean investments is also soaring...
• ...leading to an increasing relevance of companies that operate in this domain
• We use our proprietary HSBC Climate Solutions Database to create thirteen thematic climate stock screens

Clients of HSBC Global Research can access the full report via the HSBC Global Research website or by contacting Wai-Shin Chan

Investments in global energy transition, land-use and other clean technologies are growing at a brisk pace. However, they need to accelerate further into trillions of dollars per year to meet global climate goals and to make economies more resilient to adverse climate change impacts. Effective execution of climate ambitions could support clean-tech sectors, and corporates that operate in this space could benefit from rising investments. In this report, we use our proprietary HSBC Climate Solutions Database to present 13 stock screens across 10 broad strategies aligned with various thematic ideas. Overall, screens offer around 340 stock names which are involved in providing climate solutions - both mitigation and adaptation.

We know that active fund managers can only beat a benchmark if they have skill in selecting stocks and/or timing the market. But we also know that skill is a rare commodity and the majority of fund managers do not have skill. But what about ESG funds and their skill in picking stocks that improve their ESG credentials over time?

A team from the University of Virginia decided to investigate if there is such a thing as ESG skill and if it translates into better performance for ESG funds. To do this, they took inspiration from the conventional measure of skill, namely the ability to buy stocks when the price is low and sell them when the price is high. Similarly, they defined ESG skill as the ability of fund managers to buy stocks before their ESG ratings are upgraded (i.e. when the ESG performance is low) and sell them when the ESG performance is high.

Using three different ESG ratings methodologies, the study found that close to 50% of ESG fund managers have some form of ESG skill in the sense that they are on average able to buy stocks before their ESG ratings are being upgraded. But that skill is tiny, and the picture becomes much more selective if one is looking for statistically significant levels of skill. If one wants to have a 95% probability that the manager has ESG skill only about 5-10% of managers qualify. 

"Accela’s annual pre-AGM in-depth on Global Oil and Gas Majors, assesses the achievability of and the investment needed to meet net carbon intensity targets. 

This report launches Accela’s Transition League Table, a new framework to rank European major's oil and gas transition strategies, incorporating the most critical elements of transition performance.

In our latest analysis, we delve into the performance and ambition of the transition plans for 5 European and 2 Australian oil and gas majors. 

Our analysis finds minimal progress in reducing net carbon intensity (declining on average ~4% on FY19-23) compared with targets of 15-20% (FY19-23), with European majors needing to deliver ~US$300 bn of investment between now and 2030 to meet existing targets."