1. SBA FINALLY MEETS DEI The U.S. Small Business Administration’s 2021 report showed that only 18% of early-stage business loans went to women-owned firms, 8% to Hispanic-owned businesses, and 5% to Black-owned businesses. Pre-pandemic numbers were just as bad. Last month the SBA announced additional enhancements to Section 7(a) funding that should help improve its ability to meet “diversity, equity, and inclusion” (DEI) goals.
Main Street Journal
2. THE (RE)BALANCING ACT OF THE S&P 500 ESG INDEX
In its quarterly rebalance, the S&P 500 ESG index removes Tesla, Inc (TSLA) largely because of governance issues, and Elon Musk objects. While Tesla may be playing its part in taking fossil-fueled cars off the road, it has fallen behind its peers when scrutinized under a wider ESG lens.
S&P Dow Jones Indices
3. SEC’S ESG INTEGRATION PROPOSALS DIVIDE INDUSTRY
The Securities and Exchange Commission (SEC) is rewriting
rules in the hope of stemming greenwashing, and how it distinguishes between funds that merely consider ESG factors and those that focus on it: the new rules could affect the names products can have.
4. AMERICA’S POLITICAL RIGHT HAS A NEW ENEMY NO. 1: ESG INVESTORS Conservative lawmakers and state treasurers are increasingly calling for legal actions to punish bank, pension funds, and other investors who use ESG criteria in decision-making. The right has identified the popular investing strategy, which accounts for environmental, social, and governance risks, as part of a broader narrative about left-wing overreach and “wokeness” run amok.
5. SEC ORDERS BNY MELLON TO PAY $1.5 MILLION FOR OVERPROMISING ON ESG The Securities Exchange Commission (SEC) determined that BNY Mellon’s Investment Adviser subsidiary did not perform environmental, social, and governance (ESG) quality reviews of investments in mutual funds that it touted as using such strategies. The enforcement case demonstrates the SEC’s increased scrutiny of ESG investing.
6. CLIMATE ACTIVISTS’ NEXT BATTLE WILL BE FOR INDIVIDUAL BOARD SEATS After the monumentally expensive (and historic) win by hedge fund Engine No. 1 last year that placed several climate experts on Exxon Mobil’s board of directors, activists are turning to direct boardroom seat challenges. These sorts of proxy fights are difficult to win, but with the unprecedented victory in 2021, more climate activists are willing to explore this tactic.