ETF Edge - The ABC’s of ESG – Vanguard’s New Active ESG ETF 7/25/22

Episode Date: July 25, 2022

CNBC’s Bob Pisani spoke with two top ESG pros – Matt Piro, Global Head of ESG Product at Vanguard, and Jon Hale, Global Head of Sustainability Research at Morningstar. They did a deep dive on all things ESG – and broke down Vanguard’s new actively managed ESG fund, which just launched last week – pointing to still strong demand for sustainable investing even in the midst of a market downturn – plus, efforts to standardize ESG metrics in the face of regulatory pushback. In the Markets ‘102’ portion of the podcast, Bob continues the conversation with Jon Hale from Morningstar. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

The ETF Edge podcast is sponsored by InvescoQQQQ, supporting the innovators changing the world. Investco Distributors, Inc. Welcome to ETF Edge, the podcast. If you're looking to learn the latest insights on all things, exchange traded funds, you're in the right place. Every week we're bringing you interviews, market analysis, and breaking down what it all means for investors. I'm your host, Bob Pisani. Today on the show, we'll do a deep dive on all things ESG. Vanguard is out with a new actively managed ESG funds.

which just launched this month, pointing to still strong demand for sustainable investing, even in the midst of a market downturn. We've got two of the best in the business with us here to talk about it. Here's my conversation with Matt Piro, global head of ESG product at Vanguard, along with John Hale, Global Head of Sustainability, Research at Morningstar. Matt, Vanguard's already has several ESG funds, including funds that are indexed and run as exchange-traded funds. I'm interested in the fact that this is actively managed. Just tell us the rationale for launching another fund.

How does it differ from some of the other Vanguard ETFs that are already out there, some of which are indexed? Now, thanks for having me on the show to talk about this. You know, the new fund, the positive impact fund, as the name suggests, it's really a fund that's going to be investing in global equities, looking to deliver long-term outperformance by doing so in investing companies that are contributing positively to really advancing and solving some of the world's most challenging problems. whether those be environmental or social or otherwise.

You know, our other products that we offer, you've mentioned some of the ETFs that you offer today, you know, those are what I refer to as exclusionary ETFs, where those are types of products that effectively identify the types of business activities that clients may not want their money invested in, and we simply exclude those from the index itself. And the resulting portfolio just pulls those stocks out and leaves an index-based product that remains.

And then you mentioned the fact that it's actively manned, we absolutely think this positive impact fund is well done from an active standpoint because we want to deliver on both an outperformance objective While investing in those companies that contributed positively. So we're just looking here to introduce more types of ESG products to cater to an increasing number of preferences that we're hearing from our investors Right. It's interesting about that distinction between inclusive and exclusive because you can you know there's it's active and there's there's indexed, but there's also inclusive and exclusive in the ESG world so you You're looking to add companies that are trying to have a positive impact. So there's what I call an impact. It's interesting top five holdings here. I know you're not the fund manager, but I just want to point out,

ASML, Taiwan, Semi, Moderna, Deer, these are big names all known to all of us who cover the global markets. But I also want to point out that your other funds that are out there, the index funds that are out there that are exclusive ones that exclude companies. So Vanguard's ESG, US stock ETF, exclusive. It includes adult entertainment, alcohol, tobacco, weapons, fossil fuels, gambling, nuclear power. And it also excludes companies that don't meet standards for labor rights, human rights. This is an ESG screen, but this is exclusive, excludes. And what you're holding here is, in this particular EESGV is the symbol here,

what you're holding here is Apple, Microsoft, Amazon, alphabet. These show up in a lot of these exclusionary ETFs that are out there. I guess what I'm trying to point out here, Matt, is the distinction here between these two different kinds of funds between exclusionary and inclusionary funds that are out there. And you seem to be trying to saddle both of these worlds, essentially. Right. You are right. There are a couple different forms of ESG investing. And our newest launch there is what's referred to as an impact fund. So impact investing being one type of ESG investing. You have the exclusionary products, the one you're referencing there, where we're excluding companies. based on their business involvement activities.

But the third type, which you're referencing, is referred to as inclusionary. And inclusionary investing from an ESG standpoint, and we offer a fund, an actively managed fund that's done in this way. It's called the Global ESG Select Stock Fund. What they're doing is really looking to identify companies who are really leaders in the way in which they manage the risks posed and then by ESG factors. So they're including securities through stock selection based on that assessment of how those companies manage those ESG risks and opportunities as a way to help that, you know, those companies really preserve the ability to deliver long-term shareholder value. So you're

absolutely right to point out there's really three different forms as we're seeing it with that impact, inclusionary, and then the exclusionary. And we now offer products in all three product categories to cater to an increasingly diverse set of preferences we hear from our investors in this space. John, I wonder what your thoughts are on this. You're the all-round ESG expert for Morningstar. I've seen this with other funds, fund families that seek to have ESG funds that are inclusive or exclusive. And as Matt points out, even funds that are trying to have an impact and be actively managed. How does Morningstar view all of this efforts to slice and dice the ESG community? Yeah, well, you know, we define sustainable investing,

the term we use kind of as an overarching umbrella term, as a range of investment approach. a range that seek to deliver both competitive returns and better positive environmental, social, and corporate governance outcomes. Some of them are more focused on the competitive returns part. Some of them, I think, are now starting to lean more towards this broader outcomes part, often called impact. I think what we're seeing as an evolution in the space towards including impact. We started off years ago, exclusions only.

There really wasn't a lot of other information that you could bring to bear on these kinds of portfolios or using this kind of approach. Now we have, you know, a lot of information out there about individual companies and how they're handling ESG risks and opportunities. But here's the thing. From the standpoint of investor demand, a lot of investors today, think individuals. investors, but this also applies to many institutional investors as well. A lot of investors today are sustainability-minded, particularly younger investors, more so women typically than men,

and women are investment decision makers in far greater numbers than they've ever been before. This means that they're comfortable with considering the broader impact of decisions, you know, that they make in all facets of their lives as consumers, as citizens, as employers and employees. And sustainability happens when we make decisions that both meet our own needs but don't compromise the ability of others in a future generation to meet their own needs. So it should come as no surprise that with more people being sustainability minded today, they would want an approach to investing that has sustainability in mind. But that's the demand side. It's a bit inchoate. It's not necessarily precisely defined, and it varies from investor to investor.

And so this has made it very difficult for the asset management industry, the supply side, to understand that demand. And because of that, I think we're still seeing evolution in sustainable investment funds that asset managers are offering. They're clearly hearing more demand for this idea of impact and, you know, meshing that in to an overall strategy that also is seeking. to deliver competitive returns. Inchoate, it's been a long time since I've heard that word used in a sentence. I love it when you speak Latin, W. John. So you and I've been covered this for a while. ESG has evolved a lot in the last decade,

but it's still facing a lot of criticism about the lack of standardization. I track what Gensler is saying. SEC Chair Gary Gensler says he wants more disclosure about what asset managers mean when they say it fund this ESG in May. He proposed new rules. They're not out yet. They're not working yet. Their proposal to establish disclosure requirements for funds and advisors that market themselves is having an ESG focus.

He says there's a wide range of what asset managers meant and mean by when they claim their ESG. He also says, and I'm quoting, we've also asked staff to consider the ways that funds are marketing themselves to investors as sustainable green and ESG and what factors undergird those claims. John, how does Morningstar view Gensler comments? Is the whole ESG space indeed a little too fuzzy and need to be more standardized in terms of the definitions? How do you interact with Gensler on this? Yeah, well, we're preparing our comment letter now on those proposed rules. But I think in general, we agree that funds that are focused on some facets, of sustainability, ESG, need to be more transparent. It's not that they're, I think, trying

not to be. It's just that sustainable products anywhere in the economy need to be more transparent, I think, about what they mean when they say we're sustainable than do their competitors that are kind of not saying that. And I think the same thing is the case in the fund industry. And you combine that with the kind of information that funds are typically kind of required to provide to investors. You know, the fund fact sheet, the prospectus, the reports, the annual reports and semi-annual reports. Of traditional funds, yeah, don't really get a lot of great detail in those funds. I mean, yes, you get the holdings, but, you know, the real in-depth detail about what's going on in this fund from an investment. strategy standpoint. It's not it's it's it's it's kind of hard to get so so I think you know using that

model a lot of ESG funds have not enough information to investors to demonstrate that yes this is you know this is a sustainable product in this space that that as a investor interested in that that's the kind of product I want but I want to make sure it is you know I don't I don't want any you know green washed version of this and so Yeah, I think the SEC proposal is on the right track for sure in asking asset managers and telling asset managers they're going to need to provide more detail in what they mean by their particular approach. Yes. So, Matt, how does Vanguard view these efforts to, I guess, the word standardized, for lack of a better word, to standardize what ESG is? Is it okay to have competing definitions of what ESG means? What's Vanguard's approach to this?

Yeah, I mean, ultimately, and this is something we've long believed in the 45 plus years we've been at this, it's really all about protecting investors and making sure investors can make the best decisions to meet their retirement outcomes or other investment outcomes in mind. And I think in the case of ESG, as is the case when any sort of market develops, it can develop very quickly. And it can lead to, and I think in this instance, perhaps in terminology that is a little bit less well understood, which can make, it harder for the individual investors to really understand the products, you know, how they're designed, how they're going to go about delivering on their objectives from a performance standpoint, or in the case of ESG, those ESG characteristics. So for us, you know, our role as really somebody who advocates on behalf of investors is to make sure that, you know, innovation, the right kind

of innovation can happen, investors are protected, and disclosures are oftentimes a good way to do that. Obviously, the devil's in the detail in terms of the types of disclosures and the requirements and the like, and similar to what John mentioned with Morningstar, we're preparing our comment letter. But ultimately, we're going to be looking out for what we think is in the best interest of our investors, help them deliver on those investment outcomes in this space. You know, John, the market seems, correct me if my wrong, but it seems a bit saturated with ESG funds. And yet here's Vanguard, big player, launching a new fund. We have seen some outflows from ESG ETFs this year, but that's happened with parts of the broader market, too.

But some ESG funds have also closed. I saw last week, Kathy Woods' transparency fund, CTRU, which is, you know, a quasi ESG fund closed. Is the market oversaturated or is this fairly typical in a market turned down? Where are we in terms of the popularity of ESG funds in general? Yeah, I mean, I think it's only going to grow further from here, Bob, because so many investors indicate an interest in investing this way. It takes a long time for that interest to actually manifest itself in investments. I think this is the case with any kind of new asset class, particularly as it hits the retail investing market. So, you know, because because it's the case. individual investors revamping or adding to their investments a lot of times, you know, it takes some kind of event that happens in their life that causes them to make a change in their investments. So that only happens episodically with most folks. And so there could be someone out there,

you know, who's like a gung-ho for ESG kind of investor, but they may not have the opportunity to really do that for years. line until they actually are able to make these kinds of investments. So I think the market has continued to grow. But as I said before, I think there's this concern out there, as is the case with any sustainability or any product out there across the economy that claims to have, you know, sustainability characteristics that, you know, there's a proof point there that consumers want see. And, you know, I think as funds get better at demonstrating that, then more investors will invest that way. Yeah. You know, Matt, John, it strikes me as right. I mean, investors want

ESG product and you're one of the biggest fund families in the world, so you provide product for them. Can you describe generally what Vanguard's approach to developing new investment products is? I mean, here, this makes sense to me if you're trying to provide a product for investors who want something, you add an active management component. Vanguard's famous for passive, low cost, but you have well-known active funds. Here you're adding another active component here. This is a little more narrow focus. But explain sort of what the philosophy is here. Yeah, anytime we bring a new product to market, whether it's an ESG product or otherwise, you know, we have a pretty stringent set of product design principles. that we follow, we always start with the investment principle.

So we want to be very clear on the investment outcomes we're seeking to deliver by bringing the product to market. But we also look very closely at what our client's preferences are. And I think that's particularly important when it comes to ESG, because the preferences can vary. You know, what ESG means to one person means something different to another. So we very much think about that deeply

as we roll out new products to the market. So we think about the investment side first, and then we look at the clients and their preferences, what that can ultimately mean for them. And then we obviously have to make sure that we can bring the product to market as really a world-class products. We look at it from what we refer to as a feasibility standpoint. But it always comes back to the investment side. But I think in the case of ESG, there is a bit of an added element of the preferences that we're hearing about. And that's why if you look at this new product, one of the preferences we were hearing more and more about was, hey, Van Gogh, we'd like for you to

offer one of your low-cost, high-quality, long-term-oriented products where we can see that direct to investing in companies that are seeking to have that positive impact in solving some of these world's challenges. So we thought that was a gap in our lineup. We looked at it and we decided to close that gap. But in line with those product design principles, we follow across our entire product development efforts. And yet, and not to be picky at all, Matt, but the big thing here is Vanguard is a rather special company in a lot of people's minds. It is to me. I'm a Jack Vogel disciple. I've said that for 20 years. I changed my life meeting Jack Bogle in 1997. And I know the Vanguard of today is not exactly the Jack Bogle vanguard of 25 years ago.

And yet people will say, gee, Vangard's acting a lot like a very typical large, you know, investment fund now essentially a investment family, putting out new products because there might be demand for it. Does this matter at all? I mean, is Vanguard essentially now becoming just a very, very big organization. It has to supply product. And as John mentions, if demand is there, we should provide that product to them. And is that different than the old Vanguard of 25 years ago? I hear this from the old timers a lot. Vanguard is changing.

It's not the same anymore. But what do you say to those old timers out there who think Vanguard was a very special organization itself? Well, you know, I think there's a lot of commonality in the way we've run our company for the entire time. And that's really always coming back to the end investors. that is not changed one bit, right? The marketplace has evolved, the services and products we bring to our clients to help them meet their investment outcomes, that has evolved as well. And I think ultimately, if you look at somebody like Mr. Bogle, for him, it was more about

high cost versus low cost, not about active or passive, and really making sure that investors got a fair shake. And one of the things that we've observed over time, whether it's in the U.S. or other markets in which we operate, when we participate in a market, it tends to do good things for other investors, right? Because of our focus, our ethos around doing what's right for investors, lowering the cost of investing, simplifying it, quite frankly, to make it more approachable so that investors do invest, because we know that's so important, investing early, investing often, actually taking that step is most critical to achieving investment outcomes over the long term.

So, you know, we absolutely have expanded our product lineup, but we're only doing it in places where we think there's an investment case and we can do it best in class. And there's absolutely a number of areas where Vanguard has not participated in the market over the past couple of decades, things that we did not think or do not think have investment merit for the long term. So we do pick our spots. We're very clear on when we bring, when we come to market, why we're doing it and who we're doing it for. And one of the great things about our ownership structure and that we're owned by our end investors of the funds is we only have one client to serve. And that's our end clients. And that's a really important North Star for us to have in everything that we do.

All right. John, you wrote a story a few weeks ago. I read your columns for Morningstar, saying it was time for, you called a sustainable investing 2.0. You said most people want corporations to treat their workers better. They want companies to take action to limit harm but emissions, et cetera, et cetera. But a lot of these sustainable funds missed the mark, you said. How so? How do we make these funds better at this point? Just give me a minute on what point of that column was. Yeah, sure. Well, I think it relates to what I was saying earlier in our conversation that we're seeing kind of an evolution of sustainable products right now because there's, I think, a realization that despite the continued high level of demand out there, you know, investors aren't, when we talk about trying to figure out their preferences, yes, there's a range of preferences, but a lot of these preferences, if I could say the word again, are in co-it. They're not exactly incoherent. but they're just sort of like, you know, I think putting the onus back on asset managers to say, here's generally what we want.

You have to now figure out the specifics of it because we also, because it's an investment product, it also needs to have competitive returns. And so it's, I think, a greater challenge for asset managers than say, oh, you know, 20 some years ago, when real estate became, you know, a more retail-focused asset. allocation, you know, area for investors. And it's more straightforward. Here, you've got to decide, you know, how to do this. And I think being way more transparent with what you are doing, focusing on impact was one of the things that I mentioned, as well as on engagement with companies. And one thing I think that's somewhat lost in the current debate about ESG, however,

is that a lot of the funds, as they have existed in just the past, five or six years and grown so much and have so much focus on them is that it has sent a very important signal to public companies that ESG is important to investors. And this is happening at the same time that companies are realizing this is important also to our customers and our suppliers and the people that work for us. And so we're seeing a tremendous explosion of ESG focus in public companies that investors can now help along, you know, help. continue to progress.

And yet, it's still, there's stuff that makes people crazy, like this whole thing with Tesla being excluded from the S&P ESG fund. And a lot of people say, well, here's a problem. This is the problem. A lot of funds operating by wanting to include the best company every sector. So they want to include the best oil company, the best tobacco company. And then they exclude Tesla because other automakers score, I don't know, better on certain metrics like corporate governance. So most of these ESG funds, remarkably, include oil companies. So Occidental Petroleum shows up in a lot of ESG funds because it scores highest on certain metrics compared to other competitors in the energy space. I wonder if they score high enough to make a difference, or does, did S&P have a very valid point by

excluding Tesla, for example? This kind of makes people a little crazy. There's a whole debate about this. Well, here's the thing. Sustainability is complex. And there are two things that are kind of happening here. Tesla, does Tesla get a free pass for everything it does related to its environmental, social, and corporate governance performance because it's a leader in electric vehicle production, right? I mean, there's all kinds of other ESG issues that come into play when you're evaluating a company and evaluating the potential ESG risks to that. company and to its stock performance. So, you know, there are these two elements. I argue that more ESG funds should combine those two things. A lot of them are kind of separating them, saying, well, on the one hand, let's just look

at ESG risks that are faced by an individual company, you know, faced by companies and we'll consider that as part of our process and try to, you know, mitigate against that. And in the case of this particular index in Tesla, they were like, well, they're there's more ESG risk there overall than other auto companies have right now. So, but those, that same index isn't really considering impact. I think, you know, we need to go to a point where we're combining both of those things. And there's a more, you know, overarching analysis of a Tesla. And so if Tesla is in the portfolio because of its impact, then you can engage with Tesla.

you know, maybe it's a bit of a difficult engagement process, I think, currently with Elon Musk. But you can engage with Tesla about the ESG issues. And that's the same thing about oil companies. All ESG funds, they can make the choice and investors can make the choice. They're not all fossil fuel free. They don't exclude all fossil fuel companies, all oil and gas company. There's an argument to be made for engagement, for sitting down at the table and saying, we are large investors of yours. How are you going to get to net zero? How are you going to change your business? Let me ask you, before I let you go, John, just to put on my strict investor hat, forget about what's good for the planet. John, is there any evidence that ESG strategies actually outperform non-ESG strategies?

Forget about what's good for the planet. Yeah, so the way I look at this, Bob, is there's a lot of, you know, I think, more traditional investors and even academics out there that I don't think really get this so well. They like to take one element, which is, say, an ESG evaluation of a company and try to assess whether that leads to outperformance. And I think what they get wrong about is that these – the ESG investors or ESG investment products are seeking competitive returns. So ESG is not the only consideration being made in these funds. You know, there's a broader investment process, and there's all kinds of. of reasons why a particular company might be in an ESG portfolio that might not be related to ESG, might be related to how well it's growing its earnings in the next five years. And so the way I like

to look at it is we have all these ESG funds out there. Let's watch and see how they perform. And the story with ESG funds on the whole is that they generally perform at least in line with their competitors over the last five years or so during this tremendous boom in ESG. Generally speaking, they've outperformed traditional investments. So I'm not saying they're going to always outperform, but if you have an idea with your investments that, you know, we need competitive performance out of these investments. I think ESG funds have already demonstrated that they can provide that. Yeah. It helps if you own Apple, Amazon, and Microsoft is a top five holding as a lot of these funds actually do.

But I think the jury is still out on it, but it's a fascinating subject. Viewers are endlessly interested in this topic, and I am, too, and watching it involves a wonderful thing. Now it's time to round out the conversation with some analysis and perspective to help you better understand ETS. This is the

Markets 102 portion of the podcast. Today will be continuing the conversation with John Hale from Morningstar. John, thanks for sticking around with us. One of the things I didn't get a chance to talk to about in the show was about greenwashing, and greenwashing for listeners not familiar with it, is a company or a fund conveying a false impression or providing misleading information

about how a company's products might be more environmentally sound than they really are. That's greenwashing. How does Vanguard view this whole greenwashing issue? How do we address it? Well, Bob, you know, I think that addressing it through better disclosure of exactly what it is funds are doing and how they're using ESG will go a long way. I really think, you know, I don't really see a lot of examples that I would personally define as greenwashing in the industry. I think that what we do find, however, are a lot of funds out there that just really aren't explaining in enough detail and what it is they are doing when it comes to ESG. So there's a lot of misimpressions that can come from that.

There can be a lot of investors who, you know, do happen to, you know, get around to looking at the holdings in a portfolio and saying, what is that company doing in here? I don't know. I have a lot of financial advisors who might have selected, you know, an ESG fund for their clients, you know, and you select, you know, maybe an I-share because, you know, BlackRock's a big company or Vanguard, because these are trusted asset managers. But then, you know, they get this question from a client, what is Occidental Petroleum? doing in my ESG portfolio. I don't get it. Where's Tesla? And, you know, there's not enough information out there on it. So I think it's important that the SEC is proposing, you know, better and more thorough disclosure on ESG. So I want to get in Ginsburg there, Gary Gensler, the head of the SEC. He's got a proposal out there. And he seems to think that it is a problem.

I'm not sure I'm conflating. I don't want to conflate too much his comments. Like, for example, How do I know? What does the fund mean when they say they're carbon neutral, for example? And I want to be careful not to conflate claims with greenwashing or claims specifically that these companies are making bigger claims than they can really back up. You understand? There's a difference here conflating those two. But Gensler is obviously concerned about it. Yeah.

I mean, I think the SEC has been concerned. You know, it's very interesting. They've been concerned on the one hand about, you know, how not only asset managers, but also advisors, wealth managers, are, you know, defining ESG and what kinds of claims they're making about ESG and whether those are appropriate, given what investors, you know, should expect, number one. And I think number two, a little more broadly, is this idea that with any kind of sustainable product, there's just a higher level of disclosure and transparency that's needed because, you know, the potential clients and users and customers are skeptical. Even though they're pro-sustainability, they're still skeptical of these kinds of claims. So I think the SEC is trying to create a framework that will allow funds to clearly state what it is.

they do. They're not really proposing, here's the standard for, here's what an ESG fund is, here's what a sustainable impact fund is. It's like, you tell us through these disclosure standards what you mean by it so that there's a less mismatch between investor expectations and what's actually being delivered from the fund standpoint. I want to switch topics here. We talked about the SEC proposing rules that would require companies, you know, to report on climate-related risks. That proposal is still out there. But the U.S. Supreme Court, it seems to me,

dealt a very serious blow to the EPA recently and their ability to regulate global warning. This went to what they now call the major questions doctrine. So the idea seems to be that any time the federal agency proposes a rule on some major public policy question, it has to have a very specific grant of authority from Congress. that's been required in the past. This is what the Supreme Court said. Yet the court didn't provide any guidance on what is a major question or what a grant of authority actually looks like. This

seems to be to throw a lot of things greatly into doubt. What's your reading on this and how it might, if any, impact ESG? Yeah. Well, I'm not a constitutional lawyer, but what I've what I've read, you know, from constitutional scholars on this, is that it's a, the major question doctrine has sort of been created by this court out of thin air. It hasn't been applied to any kind of case that challenges the authority of a federal agency to, to take action that's been authorized by Congress. But it does potential, has the potential of throwing the, entire administrative state, at least putting it on its head. It's basically saying in a, you know, in a, complex society like the one we live in, that Congress can no longer really make to sort of general

authorizations for an agency to deal with a topic. And that when an agency deals with a topic, particularly a new one that falls kind of obviously within their purview, like climate change, carbon emissions, greenhouse gas under EPA. If it's a major question, who's to decide that exactly? But if it's a major question, they're basically saying EPA don't act on this. You know, you can't do it. You have to go back to. And of course, they know Congress is completely deadlocked on a lot of these issues and

it's like of the specificity of the kinds of policies that come out of from agencies typically have brought to bear a tremendous amount of expertise and knowledge of those particular questions before they they get through the administrative law process you know and and and the the climate disclosure from the SEC the climate the proposed climate disclosure rules are, I think, now somewhat called into question, at least, in terms of the SEC's ability to promulgate them. But they're an example of... You can see where this is going. You could get sued on anything now. Anything now is a major public policy question. There is not a specific grant in this particular little instance, whatever it is, on anything. Therefore, everything is

sort of, you know, other than the abortion rule, I think this is like the most important thing that Supreme Court's done in years potentially. Yeah. Yeah. It's in terms of public policy. It could be very far reaching. I mean, in the SEC case, let's look at that, Congress created and in very plainly authorized the SEC to protect investors by specifying public company disclosures of information about financial risk, right? They did that in the 1930s. Yeah. And what the. this rule does, the proposed rule, is to ask companies to disclose, you know, their carbon emissions, but the rule proposes disclosures of information about financial risks that are reasonably

understood to be appropriate for the protection of investors. I mean, there was no way in the 1930s that they were, that Congress was saying to the SEC, here's a list of risks that we see today. And these are the only ones you could ever deal with. John, I got to go, unfortunately, but it's been a fascinating discussion, and we'll have you back to talk about ESG and maybe more far-reaching implications of that Supreme Court ruling. John Hale is the global head of sustainability at Mooring Star and our guest today on the ETF Trends podcast. Everybody, thank you for joining us. InvescoQQQQQQ believes new innovations create new opportunities. Become an agent of innovation.

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