Corporate Borrowers Giving Up on the ESG Market

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Corporations issuing bonds are finding that it’s simply not worth the savings on interest in the bond market to jump through the hoops demanded by the ESG-industrial-complex. Natasha White and Greg Ritchie report for Bloomberg:

Bond issuers appear to be reviewing the merits of tapping the ESG debt market, based on an assessment that the lower financing costs the label generally brings aren’t worth the risk of being exposed to greenwash accusations.

“There’s a number of issuers that are reconsidering the cost benefit trade-off,” Jason Taylor, the managing director for sustainability advisory and finance at National Bank of Canada, said in an interview.

“When you define a successful sustainable finance transaction, there’s a lot of dimensions by which you can analyze it,” he said. “One is the cost savings from the greenium. But if it comes with a high level of scrutiny post transaction, it can cause some people to really second-guess whether that one or two basis points is really worth the risk of having perhaps a couple of very uncomfortable articles written.”

For now, much of the regulatory crackdown on greenwashing has centered on asset managers. But the finance industry has itself repeatedly raised concerns around the risks lurking in some corners of the market for environmental, social and governance debt.

Goldman Sachs Group Inc.’s NN Investment Partners is among asset managers getting pickier and is increasingly rejecting ESG debt pitches, it said last month. Isobel Edwards, a green bond analyst at the firm, said she and her team are often incredulous when they see some of the claims issuers make.

You know how Your Survival Guy feels about ESG. If you’re new to the site, catch up here:

• Your Survival Guy Never Buys ESG Funds Ever
• EXPOSED: ESG’s Biggest Con Explained
• ESG Is Another Way to Attack Conservative Principles
• The Anti-ESG Movement Has Begun
• The Painful Truth for ESG Investors
• ESG Creator: “It’s a Marketing Mania”
• ESG Investing Serves America’s Elites and Adversaries, not Its Citizens
• You Invest, They Win: ESG Is a Money Grab

The bloom is off the ESG rose. If corporations don’t even feel the need to pretend to achieve ESG milestones anymore, options for funds are going to dry up.

Action Line: ESG is a fee-generating gambit by fund managers looking for the next profit driver. For serious investors, a plan based on dividends and compound interest is a great option. If you need help building a plan focused on these bedrock principles of investing, get in touch with me by clicking here to email me at ejsmith@yoursurvivalguy.com. If you want to get to know me better before we talk, click here to subscribe to my free monthly Survive & Thrive letter.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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