Responsible Alpha - Responsible Alpha

In 2022, Responsible Alpha and Deception And Truth Analysis (DATA), a leading technology-based deception revealing company specializing in assessing documentation for deception, leveraged quantitative tools to analyze the accuracy of corporate statements in financial reporting by New Fortress Energy (NFE) demonstrating: • Corporate deception in regulated financial reports. • Greenwashing of ESG commitments. • Accuracy of financial disclosures. By 2024, NFE faced class-action lawsuits alleging securities fraud, linked to inflated revenue projections and inconsistent narratives about the Fast LNG project. These legal challenges have also been coupled with a significant decline in stock price, including a 23.6% drop in August 2024, after adjusted EBIDTA calculations came in $155 million dollars short of their second quarter projections.

This study explores investor sentiment towards the growing green bond market in Latin America and the Caribbean (LAC). From our survey results of institutional investors, we find institutional investors are interested in increasing their investment exposure to green bonds from the LAC region focused on funding both Nationally Determined Contributions and other green activities dependent on transparency of Use of Proceeds and data in the primary and secondary markets. These findings shed light on the current state of investor sentiment and highlight risks and opportunities pertinent LAC regional issuers, development banks, regulators, and civil society, and both LAC regional and global institutional investors. Addressing these risks and opportunities could potentially improve investor confidence and encourage greater participation in green finance, which could promote sustainable development not only in Latin America and the Caribbean, but also globally. ​

Responsible Alpha calculated the financial risks for the Port of Houston $393MM revenue bond from climate risk.

Commercial fishing is vital to the US economy, contributing billions of dollars annually and supporting millions of jobs. In 2022, the US commercial fishing industry harvested over 8.3 billion pounds of seafood valued at $5.9 billion. Beyond direct harvesting, the industry generated $183.4 billion in sales impacts, $47.2 billion in income, and $74 billion in value-added impacts, supporting 1.6 million jobs across the broader economy. Responsible Alpha provides a summary of options to use sustainable finance to improve U.S. fisheries.

The Chemical Coast, along the Gulf Coast of Texas and Louisiana, is where 84% of U.S. plastics production, across the sector’s supply chain, is located. Each state has policies that both support using industrial revenue bonds and limit property taxes on petrochemical facilities, which produce the chemicals used in plastics manufacturing, that use fossil fuel energy with fossil fuel feedstocks to make the plastics we use, despite significant risks to local communities’ health.

Commercial fishing is a cornerstone of the U.S. economy, contributing billions of dollars annually and supporting millions of jobs at both national and local levels. In 2022, U.S. commercial fisheries harvested over 8.3 billion pounds of seafood valued at $5.9 billion. The industry generated an additional $183.4 billion in sales, $47.2 billion in income, and $74 billion in value-added impacts, supporting 1.6 million jobs across the broader economy. Sustaining this critical industry requires balancing economic growth with environmental sustainability.

The Chemical Coast, along the Gulf Coast of Texas and Louisiana, is where 84% of U.S. plastics production, across the sector’s supply chain, is located. Each state has policies that both support using industrial revenue bonds and limit property taxes on petrochemical facilities, which produce the chemicals used in plastics manufacturing, that use fossil fuel energy with fossil fuel feedstocks to make the plastics we use, despite significant risks to local communities’ health.

Ensuring global food system stability requires companies use consistent and accurate approaches to their financial accounting of agriculture, so that reported values are reliable. Firms are subject to various accounting regulations under International Financial Reporting Standards (IFRS), or their local accounting standards. Naturally, markets, analysts, and portfolio managers rely on audited financial information to better understand the financial valuation and overall investment thesis in the palm oil sector. Crucial then to this understanding is accurate information. Yet, market participants may receive inaccurate, and potentially misleading information about the economic benefits and consequences of palm oil production.

Singapore’s Accounting Standards Council (ASC) has in recent years aligned itself in synch with all IAS/IFRS standards. Some firms continue to report under the previous standards, however. SFRS 16 paragraph B9 defines a lease as any contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Indofood participates in Indonesia’s Plasma Scheme and has many relationships with Smallholder farmers.

As of 2017, Astra Agro Lestari had total planted area of 290.961 hectares in Indonesia. By 2017, Astra had entered into nucleus-plasma partnerships (Plasma Scheme) involving a total of 73,099 individuals, subdivided into 2,736 farmer groups, and covering 178,379 hectares of the 297,000 hectares of landbank controlled by the group. Our study suggests that Astra Agro’s financial reports may not have been applied correctly relative to IAS 17 Leases (in Indonesia the regulation is PSAK 30).

In 2015, Felda Global Ventures – now FGV Holdings – (FGV) hired KPMG to conduct a fair market valuation due diligence on Eagle High in connection with FGV’s acquisition of a minority stake in Eagle High. KPMG’s report found that Eagle High generated over 80% of its revenues by selling crude palm oil (CPO) at the time. It also noted that Eagle High, a large publicly traded firm, was in urgent need of cash to fund its operations; had violated loan covenants due to poor past performance; and, that 17 of its plantations’ permits and land rights had expired. KPMG advised FGV to revise down its valuation to $680 million to better account for the reported ESG, sustainability, and credit risks.

A complex transaction conducted by Noble Group in 2014 serves as a good case study for understanding multiple accounting standards and how they impact the values recorded in financial statements.

A PwC report comparing Indonesia’s Financial Accounting Standards Board (DSAK) and its PSAK standards with IFRS standards found mostly consistency between the two sets of standards. But there continue to be notable differences which have material effects on comparability. London Sumatra, an Indonesian palm oil company, prepares its financial statements in accordance with the Indonesian Financial Reporting Standards (PSAK). These standards use historical cost accounting, rather than fair value accounting. Indonesia’s partial adoption of IFRS and London Sumatra’s use of PSAK not only affect comparability with peer companies, but also means that their financial reporting makes comparisons more difficult, or even risky.

The Working Group has developed a draft Strategic Plan that recommends short- and long-term strategic goals, as well as objectives and proposed strategies to achieve a routinely produced set of Government-wide natural capital accounts and standardized environmental-economic statistics that complement and operate in alignment with core national economic accounts and statistics.

Responsible Alpha developed the business, economic, and investment analysis used by 123 environmental, indigenous rights, and racial justice organizations in their letter to the Honorable Gary Gensler, Chair, U.S. Securities and Exchange Commission on the proposed rule "The Enhancement and Standardization of Climate-Related Disclosures for Investors."

In 2022 Duke Energy Corporation had $84 billion in market capitalization, $62 billion in fixed income securities, and 27,000 employees, as an energy company located primarily in the Americas that owned an integrated network of energy assets and it is one of the largest U.S. utilities. ​ In 2020, Duke reported Scope 1 emissions of 75 million mtCO2e, 24.5 thousand metric tons SO2, 39 thousand metric tons NOx, and 142.4 thousand metric tons methane emissions with coal generating 20.9% total electricity. ​ For years, Duke has stored coal ash in landfills and ponds that often leak toxins into waterways. A leak in 2014 at a Duke North Carolina coal ash pond site left coal ash coating 70 miles of the Dan River. In 2015, Duke pled guilty and agreed to $102 million in fines and restitution due to federal environmental crimes because the company acknowledged it coal ash dumps at five power plants to leak toxic waste into water supplies.

As of 2022, Dominion Energy was the lead investor in the Atlantic Coast Pipeline joint venture was a 604-mile-long natural gas pipeline with a capacity of 1.5 billion cubic feet of gas daily to alleviate a bottleneck to gas produced from the Marcellus Shale in Appalachia reaching growing markets in Virginia and North Carolina. Environmental risks, community risks, and climate risks killed the $8 billion Atlantic Coast Pipeline, forcing multibillion-dollar writeoffs at Dominion and Duke.

Marathon Petroleum Corporation, $52 billion in market capitalization, $31.6 billion in fixed income securities, 17,700 employees, Ohio-based crude oil refining company. Marathon refines, supplies, markets, and transports petroleum products. The company serves customers in the United States.

Glencore plc, $79 billion market capitalization, $33.8 billion in fixed income securities, 81,300 employees, is a diversified natural resources company. In January 2022, Swiss multinational Glencore became the sole operator of Latin America’s largest openpit coal mine, Cerrejón, when it completed its purchase of the mine from Anglo American and BHP for an estimated final sale price of $230 million after adjusting for cash flows accruing to Glencore since the announcement of the sale. But after thermal coal prices surged to a record high over the period – underpinned by a global energy crunch – Glencore said the cash payment on completion of the deal totals just $101 million.

Brazil-based JBS, $16 billion market capitalization, $14.6 billion in fixed income securities outstanding, 250,000 employees, is the world's largest processor of animal protein. JBS emissions rose from 280 million metric tons of carbon dioxide equivalent (MtCO2e) in 2016 to 421.6 MtCO2e in 2021 – an increase of 51 percent over five years – and 90 percent of these emissions are Scope 3 emissions driven by its cattle production and upstream deforestation and degradation. JBS climate footprint is greater than the country of Italy, yet JBS does not report on its Scope 3 emissions, which are 90 percent of its emissions.