December 29, 2020

Commissioner Roisman Designated as Acting SEC Chair

Yesterday, the SEC issued a statement that President Trump designated Commissioner Elad Roisman as Acting Chair of the agency. John blogged last week about former Chairman Jay Clayton’s departure – his last day was December 23.  Commissioners Hester Peirce, Allison Herren Lee and Caroline Crenshaw issued a statement congratulating Commissioner Roisman’s designation as Acting Chair. Yesterday’s SEC statement follows news last week when Commissioner Peirce tweeted an early congratulations to Chair Roisman.  It’s still uncertain who President-elect Biden will nominate to serve as SEC Chair but until then, Acting Chair Roisman will preside over a four-person Commission.

Growth in ESG Investing Charges Ahead

Growth in ESG investing has been well documented – here’s a recent CNBC article. Last summer, State Street Global Advisors (SSGA) released a report about growth in ESG investing and concluded that investors who were once indifferent about ESG seem to have resolved any lingering reservations. So much so, in fact, that SSGA projects over the next ten years we’ll see an eightfold increase in global ESG ETF and index mutual fund assets. SSGA bases the prediction on how the Covid-19 pandemic has exposed inequities leading investors to place more emphasis on living according to their values, including taking a stand with investment choices. The report cites three trends that will drive the ESG investing increase:

– The great reset in a turbulent 2020: The Covid-19 pandemic and its aftershocks have put a spotlight on important ESG issues such as income inequality, diversity and inclusion, social injustice, employee welfare and climate change. Many investors have concluded that they can no longer look the other way and are ready to address these ESG issues in their portfolios. Factors such as a company’s contingency planning and work environment, as well as how they treat their customers and communities, are now top-of-mind for many investors.

– Studies suggest that portfolios with ESG integration may provide downside protection when markets are struggling, underscoring ESG’s potential as a long-term investment. Some investors have expressed concerns that ESG investments would result in subpar performance and so far, those fears have proven to be unfounded.

– Beginning of an enormous intergenerational wealth transfer: as this occurs, SSGA believes ESG investing will be in the mainstream of every investment portfolio.

SSGA recently issued another memo saying that the momentum behind ESG investing will likely carry it far beyond the pandemic. The CNBC article references research from Sustainable Research and Analysis, an independent ESG research firm, and it attributes growth in sustainable investing to similar factors, while also attributing growth to the Paris climate accord, which it says sensitized investors and asset managers to think more sustainably, and the growing number of asset managers signing on to the UN Principles for Responsible Investing.

Prioritizing Employee Health & Safety: Are Chief Medical Officers Here to Stay?

John blogged not too long ago about how many consider the “S” in ESG the most difficult for companies to analyze and integrate. One aspect of “S” that is garnering a lot of attention during the pandemic is employee health and safety along with customer safety – this NYC Comptroller press release says it has submitted an initial shareholder proposal focused on worker health and safety. One way some companies are demonstrating their commitment to employee health and safety is by bringing on a chief medical officer – or if such a role is already in place, by expanding the CMO’s role.

For companies that don’t have someone fulfilling the CMO role, this HBR article asserts that it’s time to bring one on. Companies in the hospitality sector or with employees on the front lines are places where there’s a good chance to find a CMO or where they might be considering one. But, the article says even for companies with most employees working remote, it’s still important to have an in-house medical expert:

Hiring an in-house medical expert is an important signal that your leaders cares about their people. ‘Consulting outside experts’ does not suffice. You need to show that employee physical – and mental – health is a fundamental concern. One company gave its workforce direct access to the CMO on the company intranet. The idea was to give everyone ‘peace of mind [that the organization is] seeking a medical perspective to best understand how to keep our employees and communities safe.’

With so much conflicting information that’s changing by the day, it’s important to have an expert who is capable of wading through and interpreting all the data and opinions to determine the course of action that best serves your customer base. Organizations that are not built on hospitality have to decide when and how to start seeing clients and partners, attending road shows and conferences, and much more. Ultimately, business leaders have a social responsibility to set the conditions for safe and healthy behavior.

For a look at some of what’s included in the CMO role, this blog discusses how the CMO role at Salesforce has evolved since the arrival of Covid-19. As some companies scramble to hire a CMO, the blog says it’s likely more than just a passing fad.

– Lynn Jokela