Soapbox Snippets November 2024
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Article Type
Sustainability Soapbox
Topic
Responsible Investing
Published
December 09, 2024
Read time
4 mins
Author
Aegon AM Responsible Investment Specialists
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How California is cleaning up its chemical exposure

California's Proposition 65, also known as The Safe Drinking Water and Toxic Enforcement Act, is designed to protect drinking water sources from toxic substances that can cause cancer or birth defects. The law aims to reduce or eliminate exposure to these chemicals, particularly in consumer products, by requiring advance warnings. This encourages companies to reformulate their products to remove harmful substances rather than merely providing warnings about their presence.


A new study published last month in Environmental Health Perspectives provides evidence that the state law has successfully reduced exposure to toxic substances among Californians and the U.S. population overall. Researchers found “significant decreases” in the majority of samples after the chemicals were added to the Proposition 65 warning list. 


These findings highlight the law's effectiveness in prompting companies to reformulate their products, benefitting consumers not just in California, but across the U.S.


Among the levels that fell were highly toxic PFAS “forever chemicals,” flame retardants, diesel chemicals, and phthalates. However, concerns were raised that manufacturers might be substituting some of the banned chemicals with similarly harmful alternatives, such as replacing BPA with BPS. This could undermine the net health benefits of the legislation. Nevertheless, it is encouraging to see that the law has been effective, hopefully motivating other states to take similar steps.

 

Undocumented workers: The backbone of U.S. construction

The construction industry is deeply concerned about Donald Trump’s proposed mass deportation of undocumented immigrants, fearing it could severely impact their workforce. The sector heavily relies on migrant labour, with studies indicating that about one-third of U.S. construction workers are foreign-born, and 13% are undocumented. This reliance is especially pronounced in states like Texas, which has the highest number of unauthorised construction workers in the country.


Industry leaders worry that reinstating workplace raids could lead to significant labour shortages. Texas, despite its stringent border security measures, has not mandated the use of E-Verify, a federal system to check employee legal status. This has allowed many undocumented workers to remain employed in the construction sector.


The potential impact of mass deportation extends beyond Texas to other states with large migrant worker populations, such as California, Nevada, Washington, and Massachusetts. There are between 8 and 9 million undocumented migrants in the workforce doing essential jobs that Americans disproportionately don’t want to do, particularly in sectors with labour shortages. These include farm work (one third of the labour force), construction work (about one quarter) and skilled work like drywalling, plumbing and insulation (about half of the labour force).


The construction industry must prepare for potential disruptions and advocate for policies that support their workforce.

 

China's population crisis

China's population is expected to decrease by 51 million over the next decade, reaching 1.36 billion by 2035, according to Bloomberg Intelligence. Despite a potential birth spike in 2024 due to the Year of the Dragon, which is regarded as an auspicious time to have children, long-term trends show a decline driven by restrictive policies, high living costs, and changing social norms.


The United Nations forecasts that China's population could halve by 2100, posing significant economic, pension and healthcare system challenges. An aging population will strain these systems, prompting policymakers to intensify reforms focused on reproductive health and affordable childcare.


Efforts to boost birth rates, including ending the one-child policy and promoting three-child families, have seen limited success. Incentives like cash bonuses and extended leave have also failed to reverse the trend. China's demographic shift requires immediate attention from investors and policymakers to mitigate the impending economic challenges.

  

UK targets greenwashing with new ESG laws

The UK government has unveiled draft legislation to regulate ESG ratings providers, bringing them under the FCA’s supervision by early 2025. This initiative follows a 2023 consultation that underscored the need for clearer and more trustworthy ESG ratings, which are increasingly crucial for investors.


This move aligns with a 2021 call from IOSCO, the global securities regulator, for greater transparency and oversight in the ESG ratings sector. Since then, regions like the EU have already started implementing similar regulations.


Under the proposed law, ESG ratings providers will need FCA authorisation and must meet specific standards. This will apply to both UK-based ratings and those from overseas used in the UK. Key regulatory goals include enhancing transparency in rating methodologies and addressing conflicts of interest.


The rollout is planned over four years, starting with the legislation’s introduction in 2025, followed by policy development, consultation, and an authorisation process. Some providers, such as those already regulated by the FCA, will be excluded if ESG ratings are part of their existing services.


Economic Secretary Tulip Siddiq emphasised that these regulations will boost investor confidence, reduce greenwashing, and ensure transparency. 

 

Disclosures

Author

Aegon AM Responsible Investment Specialists
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