Managers Struggle as EU’s Sustainable Rules Demand 'Mental Agility'
June 14, 2023
In FundFire, CGC Founder Tamara Close addresses the difficulties in Sustainable Finance Disclosure Regulations compliance in the European Securities market.
As a result, SFDR has been a challenge for most managers and funds in the market, said Tamara Close, founder of Close Group Consulting.
Market participants initially welcomed the regulation in hopes that it would make environmental, social and governance, or ESG, evaluation schemes easier to compare for real asset funds, she said. However, managers soon found that gathering data for the disclosures can be an obstacle, particularly as it applies to real estate.
Commentary: Is data the problem or the answer for ESG investors?
May 12, 2023
In Pensions & Investments, CGC Founder and Managing Partner, Tamara Close, sharply analyses the role of data in ESG investment risk assessment. More ESG data can help to gain a better understanding of a company and an investment, but is this enough?
While more data may be helpful, the context surrounding that data is key to creating meaningful insights. Within the investment industry, leading investors and asset managers are those that are able to turn information into valuable insight. This insight then feeds into sourcing, analysis, investment decisions, risk management and valuations. While more ESG data will certainly increase the amount of information on a company, it will not necessarily increase the level of insight about that company. The only way to do that is to understand the context around the data which is done by performing a comprehensive ESG due diligence review as part of any investment analysis.
How Canadian Pensions Can (Re)gain their Global Leadership Position in Sustainable Investing
February 21, 2023
In Pension Pulse, CGC Founder + Managing Partner Tamara Close writes about the state of play in ESG and the underlying challenges for cross-asset global investment managers and asset owners, as well as for Canadian pensions.
While ESG was a somewhat niche term a decade ago, it would be rare to find a manager or allocator of capital today who has not heard of the term. However, while the integration of material ESG issues at its core is about widening the aperture you look through when assessing an investment for both expanded due diligence and value creation, there is no clear consensus on how, where, or when to integrate environmental, social and governance issues into an investment process, if at all.
ESG: How Climate-Related Due Diligence Will Change
February 2, 2023
In 2023, leading private credit GPs will include environmental, social, and governance as a core part of due diligence, both from a credit risk perspective and to ensure no unforeseen regulatory or reputational risks arise during the life of a loan, writes CGC Founder + Managing Partner, Tamara Close in the February issue of Private Debt Investor.
Click to read the article in the February issue of Private Debt Investor
ESG Is No Longer an Elective for Hedge Funds
January 4, 2023
In an article for FundFire, CGC’s Founder and Managing Partner, Tamara Close, writes that hedge funds may no longer be able to treat ESG considerations as optional.
More hedge funds have been embracing an environmental, social and governance investing lens in the last few years, both as an opportunity for alpha creation as well as for risk factor identification. But the era of hedge funds electing whether or not to consider ESG criteria in their operations may be fading away.
The risks of material ESG issues are far-reaching and investing in companies that manage them poorly can leave hedge funds exposed to sudden, exogenous ESG incidents, black swan events, and damaging ESG related lawsuits. These events can significantly impact valuations – as seen recently with Vale and Wirecard – and reduce shareholder value.
Debt Investors Can Go Beyond Due Diligence in ESG Matters
As debt firms take a more proactive role in ESG issues facing portfolio companies, one expert highlights their potential for an ongoing dialogue with management teams.
January 4, 2023
Christopher Faille of Private Debt Investor spoke to Tamara Close, Founder and Managing Partner of CGC.
Debt investors can engage with the management of portfolio companies about sustainability concerns well beyond their initial pre-investment due diligence, according to the founder of Close Group Consulting, an advisory firm that brings ESG expertise to the capital markets.
CGC describes one of its central goals as helping “investment managers … identify the strategic relevance of ESG integration across their investment funds”, working with them on “risk mitigation, value creation, and impact objectives”.
PDI asked founder and managing partner Tamara Close about electric vehicle manufacturing as an investment and the respective strengths of debt versus equity investors in that space.
ESG Regulatory Divide Poses Challenges for Asset Managers
November 28, 2022
In the Wall Street Journal, Luis Garcia reports on the political divide over the role that environmental, social, and governance factors should play in state pension investments. With the newly issued U.S. Labor Department pro-ESG rule for retirement plans and certain anti-ESG Republican-controlled states, asset managers are anticipating new regulatory tensions. CGC’s founder and Managing Partner, Tamara Close, offered this:
Investment firms may respond by changing the way they communicate their strategies to put less emphasis on ESG, said Tamara Close, founder and managing partner at Close Group Consulting, which helps asset managers and investors integrate ESG into their strategies. Fund managers could also make it less definitive that they are reducing their investments in certain sectors, she said.
BlackRock's Proxy Votes Reveal a Nuanced Stance
Under fire over ESG, firm's investments and voting tell different story
November 28, 2022
In the latest issue of Pensions & Investments, West Coast Bureau Chief, Arleen Jacobius, looks into the ESG investment strategies fence that BlackRock must straddle. CGC’s founder and managing partner, Tamara Close, was interviewed for her take on the current status of ESG.
"Asset owners are powering forward and are exploring if they can integrate ESG factors into their portfolios. ESG is top of mind for institutional investors," said Tamara Close, founder and managing partner of Montreal-based Close Consulting Group LLC, in an interview.
Why ESG Matters: The Three Questions Asset Owners Need to Ask Managers
September 20, 2022
Founder and Managing Partner of CGC, Tamara Close, CFA, addresses criticism of ESG in this article by Teresa Mary Bitti for Canadian Family Offices. She explains, “There is so much information – too much information – when it comes to ESG and it has led to confusion.” One of the keys is to determine the difference between ESG-themed investment funds and ESG integration.
-Press Release-
QEMP launches ESG Integration Assessment Initiative in partnership with Close Group Consulting and Finance Montréal
September 15, 2022, Montréal, Québec
We are extremely excited to announce CGC's partnership in the ESG Integration Assessment Initiative for Emerging Managers in Quebec!—Tamara Close|Founder + Managing Partner at CGC
The Quebec Emerging Manager Program (“QEMP”) is proud to announce the launch of its newly created ESG Integration Assessment Initiative, in partnership with Close Group Consulting (“CGC”) and in collaboration with Finance Montréal, as part of their sustainable finance objectives.
Can Short Selling be used as a Carbon Offset?
May 25, 2022
In this article written for illuminem, our Managing Partner Tamara Close, CFA thoughtfully addresses the question of whether a short position in a carbon emitting company can be perceived as a carbon offset for a long position in another carbon emitting company within the same portfolio.
In short (pun intended), the answer depends entirely on the carbon intention of the portfolio. Is it:
a) to reduce or manage the carbon risk of the portfolio (such as the transition to a low carbon economy, the risk of a global carbon tax, etc.); or
b) to reduce carbon emissions in the real economy
Read more about short selling as an ESG strategy and the difference between accounting offsets and real world impacts by clicking on the article below.
The SEC is Sending a Clear Message about Sustainable Investments
May 17, 2022
Our partner, Anuj A. Shah, was quoted in this Barron's article written by Lauren Foster about the U.S. Securities and Exchange Commission's recent announcement of its examination priorities for 2022.
Hedge Fund ESG Hiring Boosts Efforts to Add Women
April 20,2022
In FundFire, CGC’s Founder and Managing Partner, Tamara Close, highlights the unique advantages that women bring to the world of ESG:
More women taking on ESG roles, on average, is not surprising, Close said, because women that her firm has worked with in capital markets have tended to have a more holistic orientation and take a broader perspective on most issues than men.
Climate Change Risk Classification Methodology
April 2022
In the April 2022 issue of Intelligent Risk, Tamara Close provides a straightforward climate change risk classification methodology inspired by the valuation classification methodology for OTC derivatives which came out of the 2008/09 financial crisis.
The methodology allows for:
- increased transparency into the current and future expected risks of an investment portfolio
- ease of comparability between portfolios and asset classes
- universal application as the methodology is strategy and asset class agnostic
Close says:
“I am thrilled to have contributed to PRMIA's April issue of Intelligent Risk, which addresses the topics of climate risk and ESG.”
Alternatives Watch: Spotlight on CGC
April, 2022
Thank you Alternatives Watch and Susan Barreto for the spotlight on Close Group Consulting Inc. and how we work with private debt managers today to include ESG and climate change within their investment strategies.
It is fascinating to see how the private credit space has evolved over the past few years when it comes to ESG and climate change integration. Besides assessing and scoring these issues in the underwriting process, private debt investment teams are also monitoring their credits for new and emerging ESG and climate change issues throughout the loan period and are influencing the sustainability and resiliency strategy of a company through engagement with management, the private equity sponsors, and through sustainability linked products.
‘It’s a tsunami’: Why finance is ‘going green’ and what you should know about it
January 7, 2022
Global News looks into the green investment trend. CGC’s Managing Partner, Tamara Close, spoke with Global’s Kamyar Razavi.
“I think we’re going to see a lot more of that capital flow towards these companies, industries and sectors that are transitioning to … net-zero,” says Tamara Close, founder of Close Group Consulting, a financial advisory firm based in Montreal.
Vers une Finance Verte et Durable avec le Numérique/Towards Green and Sustainable Finance with Digital Technology
April, 2022
CGC Founder, Tamara Close, discussed the challenges with identifying true carbon neutral plans at companies and the role that this plays in creating zero carbon portfolios. Any framework or guidance would be welcome but the industry cannot wait for them or slow down in the race to get to a net zero global economy by 2050.
How Zero-Washing Undermines the Risk of Net Zero Portfolios
October 2021
In Intelligent Risk, Tamara Close discusses that while net zero portfolios can be an effective way to mitigate carbon risk, it is imperative that investment managers understand the underlying path and strategy to get to net zero in order to truly reduce absolute emissions and avoid zero-washing.
Technically, a Net Zero business model means that the carbon emissions produced by any activity must be reduced to zero or offset by carbon absorbing activities.
However, simply getting to net zero emissions for a company is not enough to ultimately achieve the emissions mitigation required to limit the global temperature rise to 1.5 degrees Celsius. In order to get there, the pathway and business model design have to reduce actual emissions.
Bottom Up Analytics Crucial for Success in Net-Zero Investing
September 7, 2021
In the September 7, 2021 KPA Advisors Ambachtsheer Letter, CGC and Netzero are cited for their analysis on pension fund investments in the new ‘net-zero’ world:
In the new ‘net-zero’ world, pension organizations must have the capability to perform ‘bottom up’ analytics, one investment at a time. Without such capability, it will be impossible to assess the transition risk embedded in potential investments, or to report on organizational progress made towards the ‘net-zero’ goal.
ESG Trend is Bypassing Most of the Global Capital Market, and that’s Bad News for Sustainability
August 10, 2021
From The Globe and Mail: “Research prepared by the corporate governance adviser Future Net Zero and the Close Consulting Group shows greenhouse gas metrics and targets are used less than 10 per cent of the time in the executive compensation plans of such companies.”
Reliance on ESG Data Providers: Better as “Opinions” than “Ratings”?
August 3, 2021
PracticalESG.com Advisory Board member, Tamara G. Close, provides a timely analysis on the ESG data market and ways to evaluate their methodologies. In an upcoming academic paper, “Inconsistencies in methodologies of ESG data providers and green bond standards” authors Kim Schumacher and Tamara Close identify 11 major inconsistencies between ESG data providers based both on the type of data provider and their underlying methodologies.
Activist Hedge Funds Bet Big on a New Weapon: ESG
July 28, 2021
Founder and managing director of CGC, Tamara Close tells FundFire that ESG-focused activist investing is on the rise and that “climate change seems to be the factor that most [hedge fund managers] are looking at right now.
Nearly Half of Hedge Funds Embrace ESG, but Doubts Remain
February 17, 2021
Tamara Close, founder of CGC and the developer of the key ESG assessment model, SRAF or the Sustainable Risk Assessment Framework, tells Lydia Tomkiw of FundFire that '“ESG policies may not be relevant to all hedge funds, but it’s important for managers to research how such policies might apply and then take ownership of their narrative around the space.”
Hedge Funds Offer Few ESG Options. Will it Change in 2021?
November 18, 2020
In this FundFire article, Tamara Close, founder of CGC, spoke about the widening gap between managers at the initial stages of ESG and those that are in a more sophisticated phase. “Managers have to own their own ESG narrative, where they fit on a maturity scale and why.” Close further adds that ESG is not a ‘one-size fits all’ approach and must be tailored to the firm, strategy and business model.
A Shift in Sustainable Risk Methodology
June 1, 2020
In Alternatives Watch, Susan Barreto speaks with CGC’s Tamara Close about the shift in sustainable risk methodology.
In recently developing a Sustainable Risk Assessment Framework, Close has outlined the reality that most investors are moving quickly forward in creating methodologies that take a multi-layered approach to investing sustainably.
One of the key points she makes is that most investors understand that there is a dynamic materiality at play within ESG. Material ESG issues do evolve rapidly with industry changes and economic cycles.
As she has pointed out previously in an Alternatives Watch interview, COVID-19 pandemic is a perfect example of the shifts that can take place dramatically.
She says her firm is seeing a global shift to issues such as employee health and safety and labor practices that may not have been considered material just two months ago in industries such as financial services.
This reality shows that for investors, a closer look at what is at stake is needed to not only make sure that a portfolio’s ESG objectives are being met, but also investment performance aims.
COVID-19 Could Be the Road Map to Navigating the Market Impact of Climate Change
March 13, 2020
“Coronavirus unwittingly may be the crisis test for how portfolios may have to deal with climate change down the road,” said Tamara Close, founder of Montreal-based Close Group Consulting, in her interview with Susan Barreto of Alternatives Watch.
The firm is dedicated to helping both investors and managers navigate the current environmental, social and governance (ESG) issue maze. She advises boards, corporations and pensions on a variety of trends and topics that are key in managing portfolio risk.Close’s consulting business focuses on ESG integration, which takes a more holistic approach to reviewing an investment portfolio that spans far beyond the age-old question of whether to divest from fossil fuel investments.
She is practical in her approach, which comes from her work at Canadian firm PSP Investments, where she was senior director of public markets and absolute return strategies and first began eyeing how to optimally integrate ESG initiatives within a broad investment portfolio.
“It’s not flipping a switch and how you do this is not that obvious,” she said in reference to oil and gas companies transitioning to a lower carbon economy. Some employ scientific experts and that is a key indicator, she added.