ESG is still very relevant

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Phil Bain, deputy managing director of Rathbones Investment Management International, takes a look at some key developments in the world of power, emissions and health

IT feels a little quieter on the ESG front, especially since the invasion of the Ukraine, but there have still been plenty of significant developments, even if they are not grabbing the headlines.

Here are just a few:

  • Germany shut down 15 coal-fired power plants over Easter to ensure that it would meet its climate targets. Fifteen power plants were kept on the grid temporarily after the war in Ukraine to battle surging energy prices.

  • The US Environmental Protection Agency has set strict emissions standards for heavy-duty trucks, buses and other large vehicles that will come into effect for future model years. Medium and heavy diesel trucks make up less than 6% of vehicles on the roads in the US, but account for a disproportionate volume of transport emissions.

  • Sugar-markets experts have warned that the industry could be impacted heavily by the proliferation of weight-loss drugs, but this could be good news from a global health perspective. Bloomberg Intelligence estimates that sales from the global obesity market, which exceeded $19bn in 2023, could exceed $80bn by 2030. As patents on branded drugs expire and cheaper versions of these “GLP-1” weight-loss drugs become more commonplace, experts say sugar demand per person could fall. Morgan Stanley analysts say that by 2035 the more widespread use of obesity drugs could mean that calorie consumption from baked goods, confectionery and soda will fall by as much as 5%.

  • Proxy advisers ISS and Glass Lewis advised shareholders to vote against the approval of Tesla chief executive Elon Musk’s $56bn pay package at the AGM, calling the compensation plan “excessive”. The compensation would be the largest ever seen in corporate America, and sets rewards based on Tesla’s market value and operational milestones.

Phil Bain, investment director at Rathbones Picture: OLLIE JONES

With elections looming across much of the world this year, some of these examples are also good reminders of how voters, as well as shareholders, can have a voice to influence.

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