Alex Gramegna – Partner since 2019 (100 St. – Edmonton, AB)
This week in charts
Pandemic saving habits have ended
Vanguard quits net zero climate effort, citing need for independence
Vanguard Group Inc is pulling out of a major investment-industry initiative on tackling climate change, the world's biggest mutual fund manager said on Wednesday, explaining it wants to demonstrate independence and clarify its views for investors.
One focus of criticism has been the effort known as the Net Zero Asset Managers (NZAM) initiative, launched in late 2020 to encourage fund firms to reach net zero emission targets by 2050 and limit the rise in global temperatures. As of Nov. 9, NZAM counted 291 signatories representing some $66 trillion in assets under management.
As recently as May Vanguard was touting commitments it had made in line with NZAM's goals. On Wednesday Vanguard posted a statement on its website saying industry initiatives like NZAM can create confusion.
"We have decided to withdraw from NZAM so that we can provide the clarity our investors desire about the role of index funds and about how we think about material risks, including climate-related risks—and to make clear that Vanguard speaks independently on matters of importance to our investors," Vanguard said in the statement.
Vanguard rivals including BlackRock Inc (BLK.N) have taken the opposite stand and said their NZAM participation does not conflict with their independence. A BlackRock spokesman said on Wednesday the company remains part of NZAM.
Daniel Wiener, chairman of Adviser Investments in Newton, Massachusetts and a longtime Vanguard observer, said the firm's withdrawal showed it lacked a strong leader on ESG issues that BlackRock has in its CEO Laurence Fink.
"Backing out of this thing is simply Vanguard blowing with the winds of constant change. They don’t have a strong personality like Fink to champion a cause," Wiener said.
German strategy paper targets China trade dependence
Germany's Economy Ministry recommends excluding using components from providers from authoritarian states in critical infrastructure and imposing stricter requirements for firms dealing with China, a strategy paper seen by Reuters shows.
Those German firms particularly exposed to China should share details on that business with the government and undergo regular stress tests, according to the ministry's "Internal Guidelines on China", marked confidential.
Deep trade ties bind Asia and Europe's biggest economy, with rapid Chinese expansion and demand for Germany's cars and machinery fuelling German growth over the past two decades. China became Germany's single biggest trade partner in 2016.
Germany did not aim to decouple from its top trade partner, China, said the paper, first reported on by online portal The Pioneer. But Russia's invasion of Ukraine had shown the high risks of close economic relations with autocratic states seeking alternative world orders.
KLM chief encourages passengers to take the train to cut emissions
KLM’s chief executive has encouraged passengers to take the train rather than fly on some short-haul journeys to help cut carbon emissions, saying the airline sector should stop viewing rail as a competitor.
“If [you] have a good alternative you should really use it,” Marjan Rintel told the Financial Times in an interview. “If you’re serious on reaching your sustainability goals, the train is not a competitor. We need to work together.”
Rintel said KLM had already block-booked seats on the train service linking Amsterdam to Brussels and Paris in response, and she had urged the business “to develop the relationships with the Dutch railways, to see what we can do at short notice to motivate our customers to go by train to Brussels or Paris”.
KLM was also looking at making it easier to buy flight and train tickets in a single booking and was in discussions with rail companies in the Netherlands and France about making transfers easier, Rintel said.
However, she expressed no interest in becoming directly involved in running train services and said the airline would work with NS and the Eurostar Group, owner of the cross-Channel Eurostar service and of the Thalys service linking France, Belgium, Germany and the Netherlands.
Music Deal Maker With Rights to Tens of Thousands of Songs Faces Chorus of Investor Unease
Investors are demanding a change of tune at Hipgnosis Songs Fund Ltd., the London-listed investment vehicle that owns the rights to tens of thousands of songs written by artists such as Shakira, Lindsey Buckingham and the Red Hot Chili Peppers.
A spokesman for the investment adviser to the fund said it adds value through active song management. It is benefiting from growth in premium streaming services and other new sources of revenue that are boosting the global music industry, he said.
When times were good, Hipgnosis tapped investors repeatedly for new equity funding to buy more songs, acquiring catalogs at what some music executives viewed as high prices.
The rush of deals fed into higher sales, boosting the stock price and its ability to raise more money. From its 2018 listing onward, Hipgnosis has raised about 1.3 billion pounds in equity, equivalent to about $1.58 billion, and borrowed hundreds of millions of dollars more.
[Founder] Mr. Mercuriadis has struck separate deals with Blackstone, which agreed in late 2021 to take a majority stake in Hipgnosis Song Management Ltd., which advises the listed fund. The investment adviser also manages a second private fund for Blackstone, known as Hipgnosis Songs Capital.
This year, however, Hipgnosis stock has fallen roughly 35% and now languishes below its listing price.
This week’s fun finds
Santa came early to the EdgePoint office
Our littlest partners came into the office to see Santa and his elves. There was mad science, presents and a lot of laughter.
Changing the wrap game
Several EdgePoint partners and volunteered their time with Holiday Helpers to wrap presents for families in need.
Fortunately, there were no reported paper cuts.
EdgePointers go back to school
Internal partners and alumni of Michael Power – Saint Joseph High School, Anna, Stefania and Daniela, along with Chief Camp Counsellor Montana, presented our Edge-ucation Camp on financial literacy at their old high school.
