Allocators, Other Investors Divided on ESG Success

A survey finds them split over whether environmental, social and governance investments perform better or the same as others.


Investors are divided about the value of environmental, social and governance-minded investing, according to a survey by alternative asset management firm Dynamo Software. Respondents to the poll were almost evenly split on whether ESG-focused investments perform better (45%) or the same (44%) as non-ESG investments, with 11% saying they perform worse.

The global survey queried limited partners and general partners in investment funds, which included many asset allocators and managers, about all kinds of investments. The Dynamo report attributed the split to a lack of extensive metrics to assess an investment’s ESG bona fides.

While many ratings exist to assess how funds’ potential portfolio companies stack up as ESG-friendly, LPs and GPs are not satisfied with the raters’ lack of detail. Danielle Pepin, Dynamo’s vice president of product, explains in an interview that ESG ratings usually fail to explain how companies have changed over time, say, by tracking their history of carbon emissions. Another shortcoming: A company’s strong environmental record might overshadow its poor social history, such as treating its employees poorly.

This comes at a time when Detroit automakers are cutting back on producing electric vehicles, offshore wind power developers are canceling or delaying projects, and home solar panels sales are down. The largest ESG exchange-traded fund, which serves as an ESG benchmark, the iShares MSCI EAFE Growth ETF, is up 8.6% this year, trailing the S&P 500 (ahead 15.9%)

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Perhaps as a result of a more sour view of ESG lately, U.S. assets under management in public equity ESG funds declined to $315 billion in Q3 2023 from $339 billion the quarter before, as seen in Lipper data, the report surmised.

Asked how important ESG ratings are to deciding on investments, many respondents (45%) said they were either “very important” or “extremely important/essential.” Another 37% termed ratings as “somewhat important.” Only 18% chose “not important.”

One clear message from the survey was that investors thought that “environmental factors appear to carry more weight than social and governance.” In general, they ranked carbon emissions as the top ESG metric to peruse, followed by energy efficiency improvements and water usage. When asked about their own funds, they ranked climate change/carbon emissions as most important, followed by energy efficiency improvements and then established business ethics.

The tilt toward environmental concerns also showed up in how the investors viewed diversity, equity and inclusion. Although DEI ranked as second most important behind the environment, the majority (68%) of investors indicated they are not allocating money based on it.   

At the same time, respondents who showed their zest for environmentalism also carried some healthy skepticism. Some 60% said they were wary about greenwashing, when companies appear more environmentally conscious than they really are.

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Brookfield Asset Management Unit Closes Deal to Sell 49% of Westinghouse to Cameco

Brookfield Business Partners bought the nuclear tech company out of bankruptcy in 2018 for $4.6 billion, while this deal values the company at $8.2 billion.




Brookfield Business Partners closed the sale of 49% of nuclear technology services company Westinghouse Electric Co. to Canadian uranium mining company Cameco Corp. last week, with Brookfield’s publicly listed affiliate, Brookfield Renewable Partners, taking a majority stake at 51%.

The total enterprise value of the deal is $7.9 billion, which was adjusted for working capital balances at the close and resulted in a final enterprise value of $8.2 billion. Westinghouse, however, has $3.8 billion in outstanding debt commitments stemming from its 2017 Chapter 11 bankruptcy, which reduced the equity cost of the acquisition. Late last week, the companies announced that they received all required regulatory approval for the sale.

Brookfield Business Partners, which is $850 billion Brookfield Asset Management’s business services and industrials unit, and its partners acquired Westinghouse out of bankruptcy in early 2018 for approximately $4.6 billion. Prior to the sale, Brookfield Business Partners’ economic interest was approximately 44%, with its partners owning the remainder of the company. Brookfield Business Partners first announced that it agreed to sell Westinghouse in October 2022.

“Since first announcing this deal a year ago, we believe the business prospects for Westinghouse have significantly improved,” Cameco CEO Tim Gitzel said in a statement. “The sustained and positive momentum for nuclear energy has been undeniable, as countries and companies around the world strive to meet their net-zero commitments and growing energy needs through clean and secure supply.”

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According to Brookfield Business Partners, following its acquisition of Westinghouse more than five years ago, it appointed a new management team and repositioned the business by altering its organizational structure, refocusing its product and service offerings, optimizing the global supply chain and investing in new technology. As a result, according to Brookfield, Westinghouse’s profitability has nearly doubled.

“We have significantly enhanced the business’ operations over the past four years, increasing its margins and strengthening its global leadership position,” Brookfield Business Partners CEO Cyrus Madon said in a statement in 2022 when the sale was announced. At the time, the company said its expected proceeds from the sale would be approximately six times its invested capital, with a 60% internal rate of return and $4.5 billion of total profit when combined with distributions received.

According to Brookfield Business Partners, it expects to generate approximately $1.8 billion in proceeds from the sale of its 44% stake in Westinghouse, with the remainder distributed to its institutional partners.

Cameco announced its plans to finance its share of the acquisition using all of its $600 million term loan, which will be drawn down at closing, along with available cash. It will not use the $280 million bridge commitment it secured concurrently with the acquisition agreement, adding that the commitment will be terminated.

As a limited partnership, Westinghouse will be governed by a six-person board of directors, three appointed by Brookfield Renewable Partners and three by Cameco. According to the announcement, decisions on “certain reserved matters … such as the approval of the annual budget, require the presence and support of both Cameco and Brookfield appointees to the board.”

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