Explore the Thinking behind our investment approach

Written by Jessica Skolnick, CFA and Adam Bernstein, ESG / Impact Analyst Our macro updates are usually focused on the “will they or won’t they?” decisions of the Federal Reserve and the market and economic impacts of those decisions. With no FOMC meeting on the calendar for August, this month we will focus on the recent volatility in long term rates, over which the Fed has much less control than it does on the shorter end of the curve. Interest Rates One of the key discussion themes at our Investment Committee meeting in the past several months has been whether it makes sense to lengthen the duration of our fixed income portfolios. As detailed in our prior blogs and commentary, we are bearish on the stock market and longer duration high quality bonds have traditionally provided ballast in portfolios when equities decline because investors flock to the safety of government bonds in periods of turmoil. This increase in demand results in lower yields and higher prices, with the biggest price increases in the longest duration bonds. In that way, longer term bonds can hedge equity market risk by moving up when markets move down. Despite this historical relationship, our Investment Committee has continued to keep our bonds short duration and high quality. While we believe we are eventually going to experience a reckoning in the stock market, we do not know when it will occur. Meanwhile, the yield curve has been deeply inverted for months. The yield differential between the 2-year Treasury and the 10-year Treasury peaked at over 108 bp[1] in March and again in July. Usually, reaching for a higher yield in bonds means taking on more duration or credit risk but today’s inverted yield curve means that investors can obtain a higher yield on bonds that have less risk. Without a compelling reason to give up yield in exchange for more risk, we maintained our positioning. After the last several weeks, we are very happy with that decision. The 10-year Treasury has risen from a near-term low of 3.75% on July 19th to close at 4.34% on August 21st, the highest level since 2007,[2] wiping out the year-to-date gains on the Bloomberg US Treasury Index. The move higher was driven by a growing acceptance that the Federal Reserve may keep rates higher for longer due to inflation that remains persistently above target and an economy expanding faster than anticipated. The catalyst was Fitch’s July downgrade of US sovereign debt exacerbated by the Treasury’s announcement that it would be increasing longer-term debt issuance through the end of the year. Despite the recent run-up in rates, we are still cautious about adding duration to our portfolios. The yield curve inversion narrowed to about 67 bp[3] as of August 21st, but remains significantly inverted relative to history. We also believe that the 10-year Treasury could move higher still. On August 18th, the Atlanta Fed revised its expected GDP estimate for Q3 up to a whopping 5.8%,[4] and we expect CPI to stabilize or move higher as a result of reduced base effects, a new health insurance adjustment in September and a potential reacceleration in energy and food prices. A 10-year Treasury rate above 5% seems crazy in the context of post-financial crisis QE and zero interest rate policy but is unexceptional when compared to most of history. ESG Update: The Return of El Niño and its Investment Implications In our latest blog we detailed some investment implications associated with El Niño climate patterns and a warming world. An El Niño is the abnormal warming of the sea surface temperatures in the central and eastern tropical Pacific Ocean. It’s part of a larger climate cycle called the El Niño-Southern Oscillation (ENSO) that occurs on average every 2-7 years. In the blog we discussed why El Niños have historically dragged down GDP production and raised inflation forecasts. Generally, El Niños are inflationary because they increase food and energy prices along the following transmission mechanisms: They negatively affect countries where heat-exposed work makes up a large percentage of GDP. Extreme heat overloads energy grids which cause “load shedding” and blackouts that increase energy demand and energy prices. Many critical crops like corn have a higher likelihood of failing if temperatures get too high, which pushes up food prices. The types of inflationary El Niño forces summarized here and detailed in our last blog are all related to the heating effect of the climate cycle, but warm temperatures are not the most direct way El Niños affect the global economy. The knock-on effects of a warmer climate cycle include droughts and sea level shifts which have a more direct impact on people and property. Droughts can damage crops, livestock, and infrastructure, while sea level changes can inundate coastal areas and displace people. Warming, on the other hand, is a more gradual process and its impacts are less immediate. The COVID pandemic was the first time we realized how fragile our “just-in-time” delivery model was. Today, supply chains have returned to normal operations and, as a result, goods inflation has normalized. But pandemic shutdowns are not the only way goods inflation can be shocked and supply chain routes can fail. “An increasing amount of climate-driven extreme weather events are taking their toll on the world’s major shipping routes.”[5] Collectively, there are seven international trade choke points where ~53% of global GDP passes through annually. The following are the estimated percentages of global GDP that pass individually through the seven international trade choke points: Strait of Hormuz: 20% Strait of Malacca: 12% Suez Canal: 10% Panama Canal: 5% Bab el-Mandeb Strait: 3% Bosphorus and Dardanelles: 2% Strait of Gibraltar: 1% [6] “The low sea levels around the Suez Canal prompted by drought conditions have caused Maersk to load approximately 2,000 containers fewer than usual on the same vessel. Typically, container ships might need to comply with a maximum depth of 50 feet on the Panama Canal. Current restrictions require ships to adhere to 44 feet of draft, forcing container ships to either weigh less or transport fewer goods.”[7] This is an example of how climate change is adding acute risk to the consensus core goods inflation projections and interest rate decisions of the Fed. Today, investors are focused squarely on services inflation because goods inflation has already retreated to below the desired ~2% level while services inflation stubbornly stands at 6.1%, as of the August CPI reading.[8] Most of the major investment houses we speak with believe that continued normalizing supply chain pressures are a reliable leading indicator of core goods prices and will continue to depress goods inflation. They also believe that services inflation is in a downtrend and, as a result, Powell’s inflation checklist is close to being complete, making the July hike the final hike of the cycle. Given what we know about El Niño inflationary pressures, and specifically the potential for them to cause goods inflation spikes, we remain unconvinced by this market narrative. In May 2021, the Ever-Given ran aground blocking trade in the Suez Canal from both directions. The Suez Canal facilitates almost $10 billion of goods daily so the six-day blockage is estimated to have resulted in $60 billion of disrupted trade and the subsequent trapping of ~$700 million in cargo.[9] The Ever-Given event has demonstrated that while a blockage of any global maritime chokepoint for any reason can have a significant influence on goods inflation, El Niño conditions and climate change make these types of economic destructive events more likely and will continue to limit the growth of economies that rely heavily on global exports.

Climate Week NYC is “the largest annual climate event of its kind, bringing together some 400 events and activities across the City of New York – in person, hybrid and online. The event takes place every year in partnership with the United Nations General Assembly and is run in coordination with the United Nations and the City of New York.”[1] The Nest Climate Campus at The Javits Center is one of the leading event partners of Climate Week NYC, and was created to establish a unified central destination in the city for people to convene.[2] Jeff recently sat down with Britton Jones, Founder and CEO of The Nest Climate Campus, to talk more about the event, which will attract thousands of people to The Javits Center from September 19th – 21st.

We are pleased to offer you a complimentary livestream invitation to our annual Climate & Capital Conference on Wednesday, September 20th, hosted at the New York Stock Exchange during Climate Week NYC. This year’s conference will be centered around three interconnected themes: adaptation, innovation, and regulation (“AIR”). Over the next decade, we believe that industry professionals will face increasing exposure to both known and emerging risks, including physical climate risk, biodiversity loss, large-scale human migration, and changing regulatory frameworks. Advances in environmental technologies and new ideas for improving the effectiveness of government policies are likely to shift the landscape even further. The 2023 Climate & Capital Conference will provide attendees with practical tools to navigate climate-related challenges and opportunities. The conference will include a series of panels, fireside chats, and interactive discussions with industry leaders around strategies for both mitigating risk and fostering innovation to reduce emissions and build resilience for the world’s most vulnerable communities. Please see a full list of speakers and working agenda here Climate & Capital Conference New York Stock Exchange September 20, 2023 Register for Complimentary Livestream

On June 26, 2023, the International Sustainability Standards Board (ISSB) issued their inaugural global sustainability disclosure standards at the New York Stock Exchange, “ushering in a new era of sustainability-related disclosures in capital markets worldwide. The Standards will help to improve trust and confidence in company disclosures about sustainability to inform investment decisions. And for the first time, the Standards create a common language for disclosing the effect of climate-related risks and opportunities on a company’s prospects.”[1] Elizabeth King, President of Sustainable Finance and Chief Regulatory Officer at NYSE’s parent company ICE, was on hand for the event, and sat down with Jeff to talk about the launch of the ISSB disclosures, ICE’s sustainable finance business and background, and this year’s Climate & Capital Conference at the NYSE, hosted by ICE, Gitterman Asset Management, Accenture, and fintech.tv during climate week NYC. We are also pleased to offer you a complimentary livestream invitation to the conference, which will take place on Wednesday, September 20th. This year’s agenda will be centered around three interconnected themes: adaptation, innovation, and regulation (“AIR”). Over the next decade, we believe industry professionals will face increasing exposure to both known and emerging risks, including physical climate risk, biodiversity loss, large-scale human migration, and changing regulatory frameworks. Advances in environmental technologies and new ideas for improving the effectiveness of government policies are likely to shift the landscape even further. The 2023 Climate & Capital Conference will provide attendees with practical tools to navigate climate-related challenges and opportunities. The conference will include a series of panels, fireside chats, and interactive discussions with industry leaders around strategies for both mitigating risk and fostering innovation to reduce emissions and build resilience for the world’s most vulnerable communities. Please see a full list of speakers and working agenda here 2023 Climate & Capital Conference New York Stock Exchange September 20, 2023 Register for Complimentary Livestream

By Jessica Skolnick, CFA and Adam Bernstein, ESG / Impact Analyst As we wrap up the first half of 2023, we are astonished by and skeptical of the relentless rally in risk assets against a backdrop of escalating risks and near catastrophes. It reminds us of a Jenga tower in the late stages of a game. The market has rallied through rapid Fed rate hikes, a worsening China slowdown, regional bank failures, the UBS takeover of Credit Suisse, rising commercial real estate (CRE) defaults and a spike in corporate bankruptcies. Think of these events as blocks in the Jenga tower. As blocks are removed from the tower and placed on the top, the players exhale a sigh of relief when, time after time, the tower remains standing. But each block adds to the fragility of the tower and the probability that next time a block is removed, the tower will topple. The question now is which block will be the one to end the game? We are watching several key risks to market stability that have the potential to shake the exuberance out of the market over the second half of the year: Monetary Policy The June Federal Reserve FOMC meeting was the first since February 2022 without a rate hike. Chairman Jerome Powell stated that, rather than hike 25 bp, the committee preferred to wait until July to monitor incoming data before deciding whether to hike again. Despite this seemingly dovish pause, the updated Statement of Economic Projections (SEP) painted a more hawkish picture. Expectations for year-end inflation were revised upward, the unemployment rate was revised downward, and the consensus rose to an additional two more rate hikes by year-end. The bond market finally started pricing out expectations for rate cuts in 2023 and focus shifted to the incoming data. At first glance, the 3.0% print for June CPI[1] appeared to show that the Fed is close to the end of its journey toward a 2% inflation target. However, most of this decline was driven by the volatile energy component and a large downward adjustment for health insurance costs. The latter pushed down health insurance CPI by 24.9% year-over-year and is due to reset in September. Core services CPI, which excludes energy, remained much higher than target at 6.2%. Meanwhile, Core PCE, the Fed’s preferred inflation measure, has been stuck in a 4.6% to 4.7% range for the entirety of 2023.[2] Until the Fed sees progress in Core PCE, excitement over the end of rate hikes is likely premature. Commercial Real Estate The double whammy of remote work and higher interest rates has continued to hammer the CRE market, particularly offices. Most commercial mortgages are variable-rate, interest-only, and non-recourse. Rapid Fed rate hikes have resulted in much higher monthly interest payments on these loans while cash flow has declined as leases expire and are not renewed. Office building values have fallen significantly, though it is difficult to tell the magnitude of the decline since transaction volume has been low. A recent study conducted by NYU and Columbia University estimated that offices in NYC could lose 44% of their value by 2029.[3] Office CMBS delinquencies have increased at the fastest six-month pace since 2000, rising from 1.6% in December to 4.5% in June.[4] Rather than try to refinance at higher interest rates, lower cash flow, and with a property value potentially below the loan value, it is rational for landlords with non-recourse loans to simply walk away, leaving the losses with investors, banks or other lenders. The risk of widespread losses across financial institutions and investment portfolios is reminiscent of the subprime crisis of 2008, though the magnitude of the potential for systemic risk is still unclear. Consumer Finances The Covid pandemic was a boon to consumers in the aggregate. Stimulus payments, PPP loans, forbearances, and reduced expenses pushed consumer savings to record highs and caused delinquencies to plummet. But the last stimulus payments went out more than two years ago and we are seeing early signs that US consumers are starting to feel the squeeze. Despite the strength in the labor market, wage growth has not kept pace with inflation. Average hourly earnings lagged CPI every month from April 2021 to January 2023.[5] Credit card and auto loan delinquencies have risen this year, particularly for younger borrowers. The NY Fed reports that 4.6% of borrowers under 30 are at least 90 days overdue on their car loan, the highest rate since 2009.[6] Higher interest rates pushed the average payment on a new car loan to $800 in 2022 and one in seven new car loans had a monthly payment of over $1,000.[7] Another Federal Reserve survey showed that the rejection rate for loan applicants rose to 21.8% in the 12 months ending in June, the highest level in five years.[8] The resumption of student loan payments in the fall is likely to increase pressure on consumer spending, which accounts for about two-thirds of US GDP growth. Corporate Bankruptcies Another recent report from the Federal Reserve found that the share of nonfinancial firms in financial distress has risen to 37%, a level higher than what has been seen in most tightening episodes since the 1970s.[9] The Deutsche Bank annual default survey, released in late May, predicted a wave of debt defaults peaking at 9% for US high yield and 11.3% for US loans by the end of 2024.[10] Already, corporate bankruptcy filings are accelerating. Bankruptcy filings for the first half of 2023 were at the highest level since 2010.[11] Looking ahead, the corporate outlook is likely to be challenged by higher interest expenses, potential reduced consumer demand, and pushback against “greedflation.” These risks, as well as the prior three, have not been adequately priced into either the corporate bond or equity markets, and any one of them could be the block that sends the tower crashing to the floor. Market Update Halfway through 2023, it looks like the bear market for stocks might be over, with the S&P 500 trailing its all-time high by just 7.2%.[12] Investors gained confidence from falling CPI data and stocks surged thanks to the speculative artificial intelligence (AI) trade in the second quarter, hitting levels some say are commensurate with the dawn of a new bull market. However, the bond market is portraying the opposite message as expectations grew worse regarding the Federal Reserve’s intent to raise interest rates and maintain them at higher levels for an extended period, increased default risks, and a widening yield curve inversion. The S&P 500 returned 8.7%[13] and 16.8%[14] for the quarter and year, driven mostly by a handful of stocks. Growth-oriented tech giants that have some exposure to the AI value chain like Apple (+49.7%),[15] Microsoft (+42.7%),[16] and Nvidia (+189.5%),[17] were responsible for ~45% of the S&P 500s year-to-date (YTD) performance.[18] The overall market performance would have remained flat through June were it not for the returns generated by these stocks, dubbed the “Magnificent Seven.” The Nasdaq 100 will soon be conducting a special rebalance to stay within its prospectus concentration limits because the Magnificent Seven accounted for ~55% of the total weighting for the index at quarter end. Due to this low breadth market rally, style investing has come back into vogue with growth indices substantially outperforming their value counterparts. The Russell 1000 Value index returned 5.0%[19] YTD while the Russell 1000 Growth index returned 28.9%.[20] International markets have largely underperformed the US this year. Developed European equities returned +14.1%,[21] Emerging Markets returned 5.1%,[22] BRIC countries returned 0.33%,[23] and the global ACWI index was up 14.1% YTD.[24] The underperformance was driven by underweights to top performing sectors like Technology and Communication Services and the underperformance of the Consumer Discretionary sector. China is down 4.9%[25] YTD off a much slower than expected post-COVID economic recovery. Nearly all crucial parts of China’s economy are underperforming, from consumer demand and manufacturing to the real estate sector. Stock market volatility declined following the June FOMC meeting, but the bond market remained unsettled, and the yield curve deeply inverted. Longer duration bonds gave back some of their Q1 gains with 20+ year Treasury fund TLT down 2.4%[26] in the quarter vs. short-term Treasuries which lost only 0.6%,[27] while the Aggregate bond index lost 0.9%.[28] Low duration and lower credit quality were the fixed income trades that won in Q2, with High Yield bonds and Bank Loans returning 1.2%[29] and 2.5%[30] respectively. Climate and ESG Update This quarter we will focus on three sustainability research topics that are driving parts of our macroeconomic assumptions. The first topic is popular investment themes that have driven equity markets this year and their climate implications. The second topic focuses on the recently published bank and climate stress tests and how that effects our views on the banking industry, and the third topic speaks to how our climate research has consistently led us to more entrenched inflation expectation than the market. Hot investment themes and their ESG implications The main driver for growth in the US this year has been capacity building and investment in large scale domestic manufacturing following passage of The Infrastructure Investment and Jobs Act (IIJA), The Innovation and Competition Act (ICA), the Inflation Reduction Act (IRA), and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act. Each of these Acts were designed to bolster U.S. competitiveness in disruptive technologies such as renewable energy, batteries, and electric vehicles (EVs), as well as semiconductors. Investment has begun to pour into these industries, but rising interest rates have limited upside price action for companies in these sectors so far. The manufacturing and construction industries became catalyzed by the revolution in AI language processing models and the promise of their applications. As of the end of Q2 ~60% of the S&P 500’s total return for this year has come from just four GICS sub-industries: Semiconductors, Technology Hardware & Storage, Systems Software, and Automobile Manufacturing.[31] Of these four industries, only 4 stocks, one from each industry (Nvidia, Apple, Microsoft, and Tesla) account for ~50% of the S&P 500’s total return. These specific industries are important not only in the context of their 2023 return contributions but because they play a significant role in our country’s path to net-zero alignment and climate resilience. Renewable energy suffers from intermittency, costs, dispatchability, storage, and raw material supply chain issues. Most of these issues can be solved with time and legislation, but one linchpin remains: the kinetic nature of the grid itself. Once energy is generated, it must be used quickly, or it can be lost. There is very little capacity for energy storage built into the grid today. Energy storage technological breakthroughs, such as battery technology and advanced semiconductors, are a nexus investment, combining current energy system opportunities with a net-zero reality. “Semiconductors play a fundamental role in the development of green technologies because they harness, convert, transfer and store energy as electricity and subsequently move it through the electric grid. Semiconductors are also necessary for producing electric vehicles (EVs), charging stations, energy storage facilities, and wind turbines.”[32] The semiconductor value chain is broken into three main stages. Suppliers (KLA Corp, LAM Research, Teradyne) mine and/or refine the raw materials used to manufacture semiconductors. Design companies (Nvidia, Qorvo, ARM) create schematics for chips and develop software to test and debug the chips. Manufacturing companies (Applied Materials, AMD, Broadcom) actually create the chip and its components using the raw materials and the layouts developed higher up in the chain. The group of companies that benefit most from recent legislation are the manufacturers and designers of semiconductors, the industries that have driven this year’s S&P 500 price action. The IRA Bill provided at least $45 billion in funding for the construction of new semiconductor factories and electric vehicle/ battery supply chains.[33] “The CHIPS Act doled out $50 billion to boost U.S. competitiveness in semiconductors, including $39 billion in direct spending on chip production.[34] Lastly, the Innovation and Competition Act (ICA) authorized $110 billion for basic and advanced technology research over a five-year period targeting artificial intelligence, semiconductors, quantum computing, advanced communications, biotechnology, and advanced energy. The Act also created a supply chain crisis-response program for these critical industries.[35] Financial System Stress Testing Rising interest rates, losses on commercial real estate, and heightened regulatory scrutiny have all come together to reshape the US banking landscape. The seeds of our current banking predicament were sowed in 2018 when legislators and politicians relaxed core banking regulations by rolling back the Dodd-Frank protections, rules that were initially put into place following the bank bailouts of the Great Financial Crisis (GFC). Deregulation lessened the regulatory burden on banks with balance sheets of less than $250 billion. Since 2018, these smaller banks often traded at premiums when compared to their large bank counterparts because of lower capital requirements, which lead to higher growth rates. The economic environment has definitively shifted, leaving many of these banks limping forward and in need of capital. A report put out by the Federal Reserve Bank of Kansas City noted that as of the end of Q3 2022, “722 banks had unrealized losses greater than 50% of capital, 31 had negative tangible equity.”[36] Following the bank failures of March 2023, the Fed created the Bank Term Funding Program (BTFP), a temporary lending program created by the Federal Reserve to help banks meet short-term funding needs. The Fed bank stress tests, which were released on June 28th, provided the most recent insight into the state of the banking system. In this year’s exam, the banks underwent a “severe global recession” test with unemployment surging to 10%, a 40% decline in commercial real estate values and a 38% drop in housing prices.[37] The overall results of the test found that all 23 of the large U.S. banks included in the Federal Reserve’s annual stress test weathered a severe recession scenario while continuing to lend to consumers and corporations. The banks were able to maintain minimum capital levels, despite $541 billion in projected losses for the group.[38] Systemic stress testing is a relatively new tool for policy makers and its scope and insights are not without criticism. In 2023, 23 banks were tested, down from 34 banks in 2022. The Fed decided in 2019 to allow banks with between $100 billion and $250 billion in assets to be tested every other year, so many of the smaller and regional banks at the heart of the crisis in March were not tested. Most real estate (CRE) loans are held by smaller banks not subject to the supervisory stress test. The banks that were tested only hold approximately 20% of office and downtown retail CRE loans. Finally, only the eight largest banks were tested for a steadily rising rate scenario.[39] Like the Comprehensive Capital Analysis (CCAR) bank stress test, the Federal Reserve Board announced that six of the nation’s largest banks will participate in a pilot climate stress test analysis exercise, beginning in Q1 2023, with a conclusion expected by year end. Although this is a step in the right direction, the early results have been called “implausible” demonstrating a disconnect between climate scientists, economists, model builders and the financial institutions using them. For example, an assessment of global GDP loss in a so-called “hothouse” world of 3 degrees higher temperatures did not include “impacts related to extreme weather, sea-level rise or wider societal impacts from migration or conflict.”[40] As a result of such overly “benign” models, large financial institutions had reported that they would suffer minimal economic impacts if the world warmed by significantly more than 1.5 degrees higher than pre-industrial levels.[41] The banking system is at a pivotal moment, and we are concerned that the major tools policymakers and central banks use to assess the resilience and strength of the banking system are not robust or sophisticated enough to protect the capital markets from the nuanced risks of today. Much of the continued bull case for stocks relies on a resilient continuously lending banking system. Inflation Climate Thesis In our latest blog we talked about how the start of the most recent El Niño cycle is one factor in our Investment Committee’s higher-than-expected inflation target when compared to the market. According to Bloomberg Economics, past El Niño events have increased non-energy commodity prices 3.9% and oil prices by 3.5%. They reduced GDP growth, especially in Brazil, Australia, India, and other vulnerable countries.”[42] Investors would be misguided to ignore the structural challenges facing the “peak inflation is behind us” argument. Climate change and our evolving energy needs require a transformation of our global energy system, and the inflationary spending required to enact that transition will be amplified by the inflationary impact of an El Niño. As a result, we see persistent stressors on already elevated core services inflation, shifting inflation risk to the upside. Raw material inputs like copper, rare earth minerals, uranium, and natural gas are essential to decarbonizing the world’s energy supply. The demand and prices for these materials is only going up. Commodities represent about 40% of CPI, with energy and food making up 7.5% and 14% respectively.[43] Commodity prices can add significant volatility to headline CPI. Energy prices have fallen sharply from 2022 highs and have acted as the major disinflationary force responsible for most of the CPI losses in 2023. As a result, the path forward for headline inflation has a lot to do with the price of energy, which is unlikely to repeat such a significant decline. US shale oil has been one of the primary sources of incremental supply for the past decade, so the future of US fracking has significant implications on inflation. Between the steady stream of negative reserve revisions and the decline in US well performance, US shale is struggling. Without finding new wells and oil basins to tap into, the data suggests the best days of the US shale industry are behind us, no matter the price energy trades. With the threat of global oversupply minimal, thanks to the precarious US energy position, depleted strategic reserves, and continued production cuts by OPEC+, we believe the risk for energy prices is structurally to the upside. _________________________________________________ We are also pleased to offer you a complimentary livestream invitation to our annual Climate & Capital Conference, hosted at the New York Stock Exchange during Climate Week NYC on Wednesday, September 20th. This year’s conference will be centered around three interconnected themes: adaptation, innovation, and regulation (“AIR”). Over the next decade, industry professionals will face increasing exposure to both known and emerging risks, including physical climate risk, biodiversity loss, large-scale human migration, and changing regulatory frameworks. Advances in environmental technologies and new ideas for improving the effectiveness of government policies are likely to shift the landscape even further. The 2023 Climate & Capital Conference will provide attendees with practical tools to navigate climate-related challenges and opportunities. Through a series of panels, fireside chats, and interactive discussions with industry leaders, attendees will come away with actionable strategies for both mitigation risk and fostering innovation to reduce emissions and build resilience for the world’s most vulnerable communities. Please see a full list of speakers and working agenda here Climate & Capital Conference New York Stock Exchange September 20, 2023 Register for Complimentary Livestream

As ESG has grown in prominence, its critics have grown in numbers. However, the ESG backlash, and related proposed state legislation, are now receiving pushback for creating “unintended consequences.” And, while the debate is getting more heated in political and investment professional circles, over 76% of retirement plan participants still don’t even know what the acronym ESG means! This lack of understanding is only compounded by the inconsistent use of the terminology by the investment industry. So, can we find any common ground between people operating on opposite sides of this debate? Apparently, yes. Financial materiality is a key area of agreement, as is the need for transparent disclosure that helps investors know what they’re putting their money into. That said, there’s (unsurprisingly) a lot of disagreement too, for example on divestment versus engagement, whether or not the fossil fuel industry is in decline, and whether stakeholder-focused capitalism improves or hurts returns. Regardless of where you stand on the issues, we invite you to check out this discussion between Jeff, Anson Frericks, Co-Founder and President of Strive Asset Management, and Alex Wright-Gladstein, Founder and CEO of Sphere. You may know Strive given one of its co-founders, Vivek Ramaswamy, recently stepped down to run for the GOP nomination for President, while Sphere was founded to provide climate-friendly options for 401(k)s and also offers a tool called AtmoSphere, which identifies investments in fossil fuels in retirement plans. We’d like to see more constructive conversations like these, as we believe they can help investors and their advisors better understand the ESG landscape and potentially reduce division. We’d love to hear what you think: