Corporations care about you!
COVID-19 has investors thinking differently about ESG…
…and so are consumers
It’s no secret that the coronavirus pandemic has hit the economy hard, but it’s also put pressure on companies to do better when it comes to Environmental, Social and Governance (ESG) factors. So, what have big investors in Canada been doing to address these non-financial considerations in their investing decisions? The short answer is not much… yet.
A special report of the Edelman Trust Barometer published on November 17, 2020 summarized the results of a recent survey on the investment behaviours of institutional investors (basically, big companies that invest other people’s money) in Canada. The report finds that 95% of these investors prioritized financial returns during the pandemic and that ESG has been “temporarily sidelined by investors due to COVID impacts.” In fact, 97% have changed their investment strategy in Canada and 93% globally.
On the bright side, the future of ESG considerations in investing is looking promising. 95% of respondents also indicated that they’re expecting companies to strengthen their commitment to ESG in their leadership and operations.
On top of that, 98% of investors said they will integrate ESG considerations directly into their decision-making processes and 80% of firms stated that they screen for diversity and inclusion metrics.
For the first time, Social is the top trust driver for Canadian investors and 92% are keen to take an “activist approach to investing,” which represents a 17% increase from last year. The downside is that 89% of respondents don’t believe companies are equipped to handle this approach.
In short, it’s hard to know if institutional investors will turn their aspirations for ESG into action given the grim outlook for Canada’s long road to economic recovery. As 2020 has taught us over and over again, it’s impossible to predict the future.
We’ll just have to wait and see if big investors in Canada will put their money where their mouth is!
In Case You Forgot – Brexit is still a thing…
…TBH, it’s been a pretty crazy year, so we wouldn’t be surprised if it slipped your mind.
That being said, there was BIG news on the subject this week that you should care about.
Canada and Britain have struck an interim trade agreement, with just one month to spare before the UK leaves the EU.
This deal – which is being called the Canada-U.K. Trade Continuity Agreement – is hugely important for both nations. Under the agreement, trade can continue between Canada and the UK under the same conditions as laid out in the pre-existing EU Comprehensive Economic and Trade Agreement (CETA), which sees £20 billion in trade take place between the two countries each year. Plus, the added unilateral benefit of eliminating costly tariffs on 98% of exports from Canada to Britain.
While both sides have made clear that this deal is only interim, there is currently no established end date for the agreement. However, Canada and the UK have expressed that it will pave the way for future negotiations on a more permanent, purpose-built deal. Speculation indicates that a future deal between the allies could encompass areas such as environmentalism, digital trade and the economic empowerment of women.
UK Prime Minister Boris Johnson commented: “Free trade is an important part of the way that we’re going to bounce back from COVID, but I also think that Canada and the U.K. share a perspective about building back greener.”
Fun fact – working directly alongside Trudeau, Johnson, and Britain’s International Trade Secretary Liz Truss on the trade deal was Mary Ng, Canada’s Minister of Small Business, Export Promotion and International Trade (and friend of Btchcoin). You can read our #MoneyCrushMonday interview with Minister Ng here.
EV Update: SPACs, Nikola, and Tesla
Last week, Quebec announced it’ll be banning the sale of gas-powered vehicles past 2035. This is a first step towards making zero-emissions vehicles (zev’s) more accessible for Quebecers. Elsewhere, Switchback Energy (NYSE:SBE) is turning heads, as the stock of the special purpose acquisition company (SPAC) continues to rise.
…What’s a SPAC?
A “SPAC” is a way for companies to go public (a type of IPO). How it works: the SPAC is formed to raise enough money through an initial public offering, to acquire another company within a set window of time. Any private investor can participate- from private equity funds to the general public – an attractive aspect for companies that might have more trouble raising through a traditional IPO. If no acquisition takes place, the SPAC is liquidated and money is returned to the investors.
While the traditional IPO process requires rigorous financial due diligence and registration of an existing company with the Securities and Exchange Commission (SEC), a SPAC doesn’t have a specific business to purchase, so the diligencing process doesn’t happen like this. This can potentially be an issue (as was the case with Nikola, the electric truck company that went public via SPAC earlier this year before erupting in controversy).
Back to Switchback: it’s set to merge with ChargePoint, the leading EV Charging Station manufacturer. The ChargePoint IPO is a big deal, because the rising stock is a reference of investor sentiments, and it could help accelerate expansion of EV charging infrastructure in North America and Europe.
In other EV News – we previously reported that Tesla was passed over last quarter for inclusion on the S&P500. In light of Tesla’s sustained profitability in recent months, it was announced last week that Tesla will join the index December 21, further cementing its position as the leading EV manufacturer. Tesla stock spiked 13% the following day. Joining the S&P will mandate more institutional investments in Tesla, which might make the stock less volatile over time.
In short, the news seems to be saying we’ll be seeing more of EV’s in the future. Vroom vroom, bitches.