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ISM Management Topics
Killexams : ISM Management Topics - BingNews https://killexams.com/pass4sure/exam-detail/630-008 Search results Killexams : ISM Management Topics - BingNews https://killexams.com/pass4sure/exam-detail/630-008 https://killexams.com/exam_list/ISM Killexams : Beyond Implementation of the ISM Code: The Rewards Of An Active Safety Management System

The requirement for implementation of the International Safety Management (ISM) Code by July of 1998 is by this time a familiar topic. Many shipping companies have begun the process of educating themselves to this new approach for operating their respective vessels and offices. Initially, most operators have been slightly less than enthusiastic to embrace this latest resolution from the IMO, but as with individual involvement with the ISM Code, the benefits of incorporating such a system within any shipping company's infrastructure gradually become apparent. The Code hasn't been drafted with the intention to completely change the way shipping companies operate today, but rather to allow individual companies to develop their own systems with the intention of promoting continual improvement within the entire industry over time. While developing a Safety Management System (SMS), it is perhaps most crucial that companies evaluate their efforts in terms of what effects their decisions today will have tomorrow.

The most meaningful initial consideration prior to implementation of the Code, is the determination by senior management of the level to which their company will comply with the Code. Degrees of compliance may vary from the most basic satisfaction of Code requirements, to a genuine internalization of its most central tenet ~ the perpetuation of continuous improvement within the SMS. While the decision to meet the barest of minimum requirements may result in receiving initial certification, Classification Society Registrars expect the SMS to provide objective evidence of improvement from year to year during the life of the certificate. To date, most shipping companies throughout the world already possess management systems which incorporate a number of the Code's basic principles. The items typically not addressed within most existing systems are precisely those which stimulate positive changes. The Code provides a variety of measures to promote improvement through active employment of the following principles: Reporting of Nonconformances and Near-Accidents; Procedures for the Implementation of Corrective Action; Master's Management Review; Internal Audits; and Management Review. These principles, which contribute to the living nature of an effective SMS, produce the benefit of assisting operators in maximizing returns on the investment of time, human resources and money within the company's management system. The greatest returns will be realized in a reduction of acci- April, 1996 dents and an eventual increase in efficiency as participation within the safety culture continues. By controlling the way a company performs a variety of functions and critical shipboard operations, the SMS will, by extension, provide for a large measure of Quality Control as well. Since the Code was borne out of accepted international Quality Standards, it should be of little surprise that this additional benefit really lies at the core of any effectively administered SMS. In this sense, the SMS achieves safety through quality management principles.

When considering how the Code will assist their respective operations, shipping companies must direct their focus beyond the implementation phase to truly appreciate how the active principles of the Code will channel efforts toward continual improvement. Positive changes within an organization are rarely the result of spontaneous luck. It is through the methodical and routine monitoring and objective self-assessment of various activities that continual improvement is effected.

Compared to the cost of an accident, implementing an SMS is relatively inexpensive.

By now this rationalization for implementing the Code seems a bit jaded. Since it isn't simply a matter of acceptance or approval of the code any longer, this slogan might best be replaced by one of the most direct expressions of the necessity for continual improvement in an increasingly competitive global market.

By maximizing their efforts to produce truly active Safety Management Systems within their organizations, shipping companies will not only be prepared to meet the requirements of the Code, but also appreciate positive growth individually and as a collective movement within the marine transportation business

Sun, 15 May 2022 05:38:00 -0500 en text/html https://www.marinelink.com/article/maritime-security/beyond-implementation-rewards-management-495
Killexams : ISM manufacturing

American factories powered up in June at the fastest pace in nearly three years with robust advances in production, orders and employment that indicate a firming in the economy, data from the Institute for Supply Management showed July 3.

July 5, 2017
Thu, 30 Jun 2022 11:59:00 -0500 en text/html https://www.ttnews.com/categories/ism-manufacturing
Killexams : ISM report points to slight May manufacturing gains By ·

Manufacturing output, for the month of May, eked out a slight gain over April, while remaining in growth mode, according to the most exact edition of the Manufacturing Report on Business, which was issued today by the Institute for Supply Management (ISM).  

The report’s key metric, the PMI, came in at 56.1 (a reading of 50 or higher indicates growth), for a 0.7% increase over April's 55.4 reading, marking the 24th consecutive month of growth, at a faster rate, as well as the 24th consecutive month of overall economic growth.

May’s PMI reading is 2.7% below the 58.8 average over the last 12 months, with June 2021’s 60.9 and April’s 55.4 marking the respective high and low readings for that period. What’s more, March and April’s PMI readings represent the two lowest monthly PMI readings since September 2020’s 55.4.

ISM reported that 15 manufacturing sectors reported growth in May, including: Apparel, Leather & Allied Products; Printing & Related Support Activities; Machinery; Nonmetallic Mineral Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; Paper Products; Petroleum & Coal Products; Plastics & Rubber Products; Fabricated Metal Products; Chemical Products; Miscellaneous Manufacturing; Primary Metals; and Electrical Equipment, Appliances & Components. Each of the six largest manufacturing sectors— Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; Petroleum & Coal Products; and Chemical Products—saw moderate to strong May gains, added ISM. The lone industry seeing a decline was Furniture & Related Products.

The report’s key metrics were mixed in May.

New orders, which are commonly viewed as the engine that drives manufacturing, saw a 1.6% gain, to 55.1, following a 0.3% April decline, while growing, at a faster rate, for the 24th consecutive month. ISM said each of the six largest manufacturing sectors—and 11 in total—reported growth.

Production—at 54.2—saw a 0.6% increase, growing, at a faster rate, for the 24th consecutive month, with five of the six largest sectors—and eight overall—growing. ISM noted that demand remains strong, with hiring and material availability showing continued signs of recovery, while factories remain challenged to hit “optimum floor rates,” mostly due to high levels of employee turnover.  

Employment—at 49.6—dropped 1.3%, contracting after eight consecutive months of growth, marking its lowest reading since November 2020’s 48.1, with three of the six largest manufacturing sectors growing and eight growing overall. ISM said that its panelists’ companies continue to struggle to meet labor management plans, while there are signs of improvement. And it also observed that 7% of them are seeing greater hiring ease, which is up from April’s 1%, while 89% of Employment comments were hiring-focused. ISM said that its survey panelists’ companies are still indicating employment levels are being driven by a primarily by turnover and a small labor pool and affecting further output growth.

Other notable metrics in the report included:

  • Supplier Deliveries—at 65.7 (a reading above 50 indicates contraction)—slowed, at a slower rate, for the 75th consecutive month, with the reading off from May’s 67.2. ISM said that this reading continues to reflect suppliers’ difficulties in meeting demand from panelists’ companies;
  • Backlog of Orders—at 58.7—increased 2.7%, growing, at a faster rate, for the 23rd consecutive month, with ISM saying that backlogs expanded in May at a faster rate, as output remains constrained and new orders continue at moderate levels;
  • Inventories—at 55.9—increased 4.3%, growing, at a faster rate, for the 10th consecutive month, and Customers’ Inventories—at 32.7—down 4.4%, decreasing too low, at a faster rate for the 68th consecutive month; and
  • Prices—at 82.2—decreased 2.4%, increasing, at a slower rate, for the 24th consecutive month

Comments from ISM member panelists in the report showed some familiar themes, including supply chain issues and pricing, among others.

A Miscellaneous Manufacturing respondent said that supply chain issues are causing his company to dramatically extend lead times, with production lines running low or are out of parts needed to complete rates every week in May.

And a Plastics & Rubber Products respondent said that price increases have not let up.

“I thought 2022 was going to be better, but it hasn’t been,” said the respondent. “Shortages (among other issues) are still disrupting the supply chain.”

In an interview, Tim Fiore, Chair of the ISM’s Business Survey Committee, said that when looking at May’s data, the seasonally-adjusted factors were about half of what they were compared to April’s. And he said when taking out the last three months of seasonally-adjusted factors, the PMI has come down about a point a month.

“Overall, May was a really good story,” he said. “What we are seeing here is an easing in supply chain issues and easing in pricing, both very small but nonetheless still there. Once we take the artificial impacts out, like Omicron in January, Russia invading Ukraine in February and March, we are back on track here to get back to equilibrium. Economic forces are driving it in that direction. We saw a decline in backlog and an increase in customer inventories in April, which reversed in May. There is not a concern on the demand side, but on the input side [supplier deliveries, inventories, and imports], we are seeing things as being a little bit slow but steady.”

The underlying theme within manufacturing though, said Fiore, remains labor, with companies still struggling to get enough people on factory floors, with it not being as much of a hiring issue as it is in keeping employees, which he cited as the dominant reason for the employee data in May.

“We cannot increase the production number to where it should be [at around 58], due to the labor,” he said.

Addressing inventories, Fiore described May’s 55.9 as a very healthy number, calling it about as strong as it could be at this time, with a lot of semi-finished products in the manufacturing pipeline, with companies essentially taking whatever they can get, in the form of a lot of unusual inventory that they would not usually have. And he added that this comes at a time when lead times are still at record levels, as are capex and raw materials’ lead time.

“Until those start coming down, we will remain in a demand-driven range,” he said.




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Wed, 01 Jun 2022 06:58:00 -0500 text/html https://www.scmr.com/article/ism_report_points_to_slight_may_manufacturing_gains
Killexams : Data quality now outranks security in new governance initiatives

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Enterprise Strategy Group (ESG) and systems management provider Quest Software today released their 2022 State of Data Governance and Empowerment Report, an annual study [subscription required] that identifies challenges and innovations in data governance, data management and dataops

A key takeaway is that the pursuit of high-quality data has overtaken data security as the most important motivator for data governance initiatives. Forty-one percent of IT leaders agreed that their business decision-making relies fundamentally on trustworthy, high-quality data. At the same time, 45% of those surveyed contend that problems with data quality are the biggest detractor from return-on-investment in data governance efforts.

The findings are based on ESG’s survey of 220 business and IT professionals responsible for and/or familiar with data governance and empowerment strategies, investments and operations at their organizations. All the organizations represented in the research have at least 1,000 employees and annual revenues of $100 million or more.

Using data to the max

While they recognize the high importance of high-quality data, according to the survey, data management leaders are still struggling to Boost their data and the capability to strategically leverage and maximize data use in practice.

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Security remains a major concern for all data executives. But the tide has shifted toward maintaining high data quality standards first in order to get the right data in place – even before safeguarding it in whatever storage arrangement is selected by the enterprise.

“We saw the convergence of data-quality initiatives into data governance some time ago,” Heath Thompson, president and GM of Quest’s information systems management (ISM) business, told VentureBeat. “When I looked at this ESG report, it was interesting to see how important data quality has really become as a front-and-center topic.” 

Once you lay the foundation for data governance, Thompson said, there are many operational things you can begin to do, including building policy, whether it be data security, dataops or something else. “That’s how the industry is starting to do it now.” 

Dataops being used in data-quality initiatives

Dataops is a collaborative data management practice focused on improving the communication, integration and automation of data flows between data managers and data consumers across an organization.

While the challenges of data visibility and observability are different across industries, dataops was overwhelmingly recognized in the survey as the primary solution to drive forward data empowerment, Thompson said. Ninety percent of those surveyed agreed that strengthening dataops capabilities improves data quality, visibility and access issues across their businesses. 

The biggest opportunities to Boost dataops accuracy and efficiency lie in investing in automated technologies and the deployment of time-saving tools, such as metadata management. The survey reported that only 37% of respondents describe their dataops processes as automated, and a similarly small proportion report having automated data cataloging and mapping today (36% and 35%, respectively).

“Trustworthy data and efficient data operations have never been more influential in determining the success or failure of business goals,” Quest CEO Patrick Nichols said in a media advisory. “When people lack access to high-quality data and the confidence and guidance to use it properly, it’s virtually impossible for them to reach their desired outcomes.”

The report also revealed that business leaders struggle not only to make sense of their data but to locate it and use it in the first place, Thompson said. Forty-two percent of survey respondents said at least half of their data was “dark data” – that is, retained by the organization, but unused, unmanageable and unfindable. An influx in dark data and a lack of data visibility often leads to downstream bottlenecks, impeding the accuracy and effectiveness of operational data, Thompson said.

“We’re not talking about the ‘dark web’ here,” Thompson said. “The dark data we’re concerned with is all that data that is collected but never used by an enterprise. Dataops automation is being used to fix this.”

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Tue, 12 Jul 2022 05:00:00 -0500 Chris J. Preimesberger en-US text/html https://venturebeat.com/2022/07/12/data-quality-now-outranks-security-in-new-governance-initiatives/
Killexams : ISM report: June manufacturing output falls from May but growth still intact By ·

Following a slight May gain, June manufacturing output fell, while remaining on the right side of growth, according to the most exact edition of the Manufacturing Report on Business, which was issued today by the Institute for Supply Management (ISM). 

The report’s key metric, the PMI, came in at 53.0 (a reading of 50 or higher indicates growth), for a 3.1% decrease compared to May’s 56.1 reading, marking the 25th consecutive month of growth, at a faster rate, as well as the 25th consecutive month of overall economic growth.

June’s PMI reading is 5.2% below the 12-month average of 58.2, also marking the lowest reading over the last 12 months and also the lowest going back to June 2020’s 52.4. The high over that period is October’s 60.8.

ISM reported that 15 manufacturing sectors reported growth in June, including: Apparel, Leather & Allied Products; Textile Mills; Printing & Related Support Activities; Computer & Electronic Products; Machinery; Electrical Equipment, Appliances & Components; Primary Metals; Nonmetallic Mineral Products; Plastics & Rubber Products; Transportation Equipment; Fabricated Metal Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Food, Beverage & Tobacco Products; and Chemical Products. The three industries reporting contraction in June compared to May are: Paper Products; Wood Products; and Furniture & Related Products.

The report’s key metrics were largely down in June, including:

• New orders, which are commonly viewed as the engine that drives manufacturing, decreased 5.9%, to 49.2 contracting after 24 months of growth, with eight sectors seeing gains;
• Production, at 54.9, increased 0.7%, growing, at a faster rate, for the 25th consecutive month, with 10 sectors seeing gains;
• Employment, at 47.3, fell 2.3%, contracting, at a faster rate, for the second straight month, with nine sectors seeing gains;
• supplier Deliveries, at 57.3 (a reading above 50 indicates contraction), slowed at a slower rate, for the 76th consecutive month, with 14 sectors reporting slower deliveries;
• Backlog of orders, at 53.2, growing, at a slower rate, for the 24th consecutive month;
• Inventories, at 56.0, were essentially flat, up 0.1%, growing, at a faster rate, for the 11th consecutive month;
• Customer inventories rose 2.5%, to 35.2, slowing for the last 69 months; and
• Prices fell 3.7%, to 78.5, increasing, at a slower rate, for the 25th consecutive month

Comments submitted by the ISM member respondents highlighted various themes, including: high backlog and a slowing of incoming orders; high inventories; and material availability issues, among others.

In an interview, Tim Fiore, Chair of the ISM’s Business Survey Committee, described the June report as “complicated,” in that inputs for consumption and demand, moved in the right direction towards equilibrium, with supplier deliveries, while tailing off in what he called the proper tension range.

“Prices are coming down slowly but surely, which is good, as you cannot run on these elevated prices forever, and are causing the Fed to do things that have people concerned,” he said.

On the consumption side, he said seasonality factors drove down production somewhat from its preferred range of 58-to-60, because there are still issues in keeping workers on factory floors.

“Companies are still hiring but what has markets concerned is that demand fell off, with contraction in new order levels and as a result of that you see backlog of orders coming down, because without growth in new orders, you are going to consume your backlog,” he explained. “This is the fourth month of this overordering impact. Buyers are still sitting there with excessively long lead times as prices are coming down. Whatever is happening on the new orders side is happening so far out in the order books that it is not an issue. I am looking for lead times to come down around 5%.”

On the employment front, Fiore said that manufacturers would not be hiring people if they were concerned about laying them off in September or even January, adding that by continuing to hire, the manufacturing community is saying that whatever is happening on the new orders and demand side is not viewed as pertinent to the near-future over the next six-to-12 months.

“It is really just adjusting for excessively long lead times in new order books, with buyers now pausing, making those lead times come down,” he said. “And prices are moving in the right direction, too, with decreases happening, which everyone wants. Demand is not being destroyed in manufacturing at the moment.”




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Fri, 01 Jul 2022 05:37:00 -0500 text/html https://www.scmr.com/article/ism_report_june_manufacturing_output_falls_from_may_but_growth_still_intact
Killexams : U.S. manufacturing sector slows in June; new orders measure contracts -ISM No result found, try new keyword!The Institute for Supply Management (ISM) said on Friday that its index of national factory activity dropped to 53.0 last month, the lowest reading since June 2020, when the sector was rebounding ... Fri, 01 Jul 2022 02:22:00 -0500 text/html https://www.nasdaq.com/articles/u.s.-manufacturing-sector-slows-in-june-new-orders-measure-contracts-ism Killexams : ClearBridge Appreciation ESG Strategy Portfolio Manager Commentary Q2 2022
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Decline Opens Opportunities—Some Patience Required

Market Overview

The surprising resilience of the S&P 500 Index we noted in our first-quarter commentary gave way to a dramatic decline of -16% in the second quarter. Issues that concerned us earlier in the year only deepened: the war in Ukraine has no end in sight; inflation in wages, food and energy remains persistent (Exhibits 1 and 2); the Federal Reserve has stepped up its hawkish rhetoric; and valuations remain elevated by historical standards. Signposts we referenced as predictive of future economic activity and equity market opportunity have also deteriorated. Credit spreads continue to widen, parts of the yield curve are flat, economic surveys look bleak and the Fed remains intent on draining liquidity via aggressive interest rate increases and shrinking its balance sheet.

Exhibit 1: Wages are Up…

Exhibit 1: Wages are Up…

As of May 31, 2022. Source: ClearBridge Investments, Atlanta Fed, Bloomberg Finance.

Exhibit 2: …But So are Prices

Exhibit 2: …But So are Prices

As of May 31, 2022. Source: ClearBridge Investments, United Nations, Bloomberg Finance.

Equity investors had nowhere to hide in the second quarter as all 11 GICS sectors declined. Market leadership was largely unchanged from the first quarter — remaining decidedly defensive — with the energy, consumer staples, utilities, and health care sectors producing the best relative returns. Energy sector performance remained buoyed by stubbornly high oil and natural gas prices, while investors took shelter within the regulated returns of the utilities sector. The historically defensive food and beverage industries (within consumer staples) also offered a slight refuge as investors bet consumers will still buy Corona, ketchup and Cheerios regardless of the economic outlook. A look at the health care sector provides the best example of the market’s defensive tone as the staid pharmaceutical industry buoyed returns, while health care equipment and life science tools underperformed.

Lagging sectors were also similar to those in the first quarter. Consumer discretionary, communication services and information technology (IT) all declined more than 20% April through June. Consumer discretionary weakness was broad based. Bellwethers such as Amazon.com (AMZN) and Target (TGT) fell more than 30%, caught flat-footed with excess warehouse capacity and bloated inventories as post-pandemic consumer behavior shifted away from bigger-ticket items such as electronics and home furnishings to apparel and grocery — and as consumers retrenched from inflation shock. The shift to smaller-ticket items stoked fear of deteriorating consumer spending and contributed to the staggering decline in cruise lines and casino stocks, many of which fell more than 50% in the second quarter alone. Communication services was dogged by the entertainment industry due to concerns over the growth and profitability outlook for streaming services. Finally, although technology weakness was also broad based, it was especially acute for the semiconductor industry where fears of a cycle downturn built throughout the quarter as evidence of an inventory correction mounted.

Outlook

While the market decline has begun to create opportunities, we believe a cautious stance is appropriate. Valuations still look high, and the economic path ahead looks fraught. The Federal Reserve faces a tricky path. Either it tightens sharply, hurting earnings, or it tightens too little to reduce inflation, increasing the intermediate-term level of interest rates. In both cases stock prices seem vulnerable.

We believe liquidity is a (if not the) primary determinant of equity market performance, and the best environment for stocks is one where the Fed provides liquidity to achieve economic acceleration. Today’s environment is exactly the opposite. For the first time in decades the U.S. money supply turned negative in May. It will be another six to nine months before the impact of quantitative tightening will be felt. Several key economic indicators are flashing warning signs. Initial jobless claims have turned up, the ISM is below 50 and the Treasury yield curve is inverted (Exhibit 3).

Exhibit 3: Treasury Yield Curve is Inverted

Exhibit 3: Treasury Yield Curve is Inverted

As of July 7, 2022. Source: ClearBridge Investments, Bloomberg Finance.

Not all is gloom and doom. We start from a very good place. Unemployment at 3.6% is full, credit costs and delinquencies are near all-time lows (Exhibit 4), consumer balance sheets are in good shape, significant pent-up demand exists for houses and cars and many raw materials are off sharply from first-quarter and early second-quarter spikes.

Exhibit 4: Delinquency Rate for All Consumer Loans

Exhibit 4: Delinquency Rate for All Consumer Loans

As of March 31, 2022. Source: ClearBridge Investments, Federal Reserve, Bloomberg Finance.

Although the market decline brought P/E ratios optically in line with the 15-year average of 16x, we remain concerned about the market’s valuation. In the mid-2000s, when the federal-funds rate fluctuated between 2% and 5%, a 16x market P/E multiple was more of a ceiling than a floor. Consensus earnings estimates have yet to be revised lower to reflect more challenging economic fundamentals — so the “E” in P/E is too high. Alternative measures of the market’s valuation (such as the Buffett Indicator, which pits the total market valuation to GDP, or the CAPE or Shiller P/E ratio, which is cyclically adjusted) suggest stocks remain aggressively valued (Exhibit 5). It seems we are in the early innings of an expectation adjustment period and although the market is down it is hard to argue it is cheap.

Exhibit 5: Hard to Argue Market is Cheap

Exhibit 5: Hard to Argue Market is Cheap

As of June 30, 2022. Source: ClearBridge Investments, Bloomberg Finance.

Our emphasis is always to own companies with robust earnings and cash flow throughout the business cycle. The investment environment is likely to remain hazardous for hyper growth companies who have yet to produce profits or free cash flow. We believe software companies with high gross margins and pricing power can perform relatively well even in a high-inflation environment. We remain cautious on semiconductor stocks. Oil and materials prices appear to have peaked. Coatings and other specialty chemicals companies will benefit from lower raw materials prices while volumes should remain healthy even in a recession. The market decline has created opportunities in some stocks in the renewables and renewable energy sectors.

Conclusion

We continue to believe investors should stay the course in equities, although total return expectations should be muted for the near term. We continue to recommend a balanced approach to the markets, including both growth and value stocks with an emphasis on high-quality companies. That said, we believe effective Fed policy will reduce inflation over time and offer patient, long-term investors the opportunity to purchase high-growth shares at better prices later this year.

Portfolio Highlights

The ClearBridge Appreciation ESG Strategy outperformed the benchmark in the second quarter. On an absolute basis, the Strategy had gains in two of 11 sectors. The real estate and health care sectors were the contributors, while the main detractors were the information technology (IT), financials, consumer discretionary and communication services sectors.

On a relative basis, overall stock selection and sector allocation effects positively contributed. In particular, stock selection in the health care, IT, consumer discretionary, communication services and real estate sectors as well as an overweight to the consumer staples sector and an underweight to the consumer discretionary sector were positive. Stock selection in the consumer staples sector and an underweight to the utilities sector detracted.

On an individual stock basis, the largest contributors were Merck (MRK), Eli Lilly (LLY), T-Mobile (TMUS), Pfizer (PFE) and UnitedHealth Group (UNH). The main detractors were Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), Costco (COST) and Berkshire Hathaway (BRK.A, BRK.B).

During the quarter we exited positions in Texas Instruments and Salesforce in the IT sector.

ESG Highlights

Analyst-Led Engagements Uncover Value

Environmental, social and governance (ESG) investing has made much progress over the last two decades. Investors in public equities and corporations have taken more ownership of the impact they can have mitigating climate change and making progress on social goals such as diversity, equity and inclusion; ESG data and investment products have proliferated; and ESG assets under management have continued to grow, with most continuing to be actively managed.

Amid such growth has come scrutiny over potential differences between the claims and realities of ESG investing. This has come on the part of regulators, asset owners and increasingly in the public eye, among business and government leaders.

In this environment we think it worthwhile to highlight the value added by ClearBridge engagements and their role in our investment process and stewardship activities. We have made steady improvements and progress in our process, marked by several milestone years, from 2005, when we established a central research platform that began integrating ESG factors by sectors, to 2012, when we explicitly incorporated ESG analysis in analyst compensation and performance reviews, to 2014 when we formally introduced proprietary ESG ratings, which capture company-specific drivers of risk and return related to sustainability. Currently, 100% of our actively owned companies have an ESG rating assigned.

A key through-line in our history of ESG integration, and a key point of differentiation, is that it is carried out by our analysts: we think there is immense value in having the same person responsible for covering a company’s fundamentals and its ESG characteristics. Company engagements, therefore, are likewise led by ClearBridge sector and portfolio analysts, an approach that we believe gives them insights that might not be top of mind for other investors and a fundamental edge, gained through long-term discussions with CEOs and CFOs of portfolio holdings.

Transforming Climate Risks to Opportunities

In many cases, ClearBridge engagements have specific objectives, such as encouraging the retirement of fossil fuels and increasing use of renewables. Such has been the case with electric power company AES (AES), with whose executives and board members we have been engaging for several years on the company’s path to reduce its carbon footprint. We believe our voice, as a top shareholder, has been a valuable addition to AES’s decision making along this path, and our engagements have helped us identify where climate-related risks in a company’s operations could be climate-related opportunities.

Several years ago, we began discussing with AES the lack of terminal value from coal (Exhibit 2), and we expressed how coal-related ESG concerns were weighing on AES’s valuation multiple, as the ESG risk premium was rising. We helped convince AES to stop investing in coal plants and start shutting down existing coal capacity. The next step was to add renewable energy exposure in the form of wind, solar and industrial scale battery storage (Exhibit 3), in line with U.N. Sustainable Development Goal (SDG) 7: Affordable and Clean Energy (we discuss how an investment framework may further the SDGs in our 2022 Stewardship Report). We shared our belief that any lost near-term operating earnings would be made up with a higher valuation multiple.

Exhibit 6: Planned U.S. Utility-Scale Electric Generating Capacity Retirements 2022 (14.9 GW Total)

Exhibit 6: Planned U.S. Utility-Scale Electric Generating Capacity Retirements 2022 (14.9 GW Total)

As of Jan. 11, 2022. Source: U.S. Energy Information Administration.

Exhibit 7: Planned U.S. Utility-Scale Electric Generating Capacity Additions 2022 (46.1 GW Total)

Exhibit 7: Planned U.S. Utility-Scale Electric Generating Capacity Additions 2022 (46.1 GW Total)

As of Jan. 11, 2022. Source: U.S. Energy Information Administration.

As our discussions have progressed, AES has been increasingly aggressive in reducing its carbon intensity by lowering coal capacity and investing in renewable energy, as evidenced by its declining GHG emissions. As we had anticipated, AES’s valuation multiple recovered as its product mix shifted from coal to renewables.

ClearBridge encourages companies to align their net-zero goals with the Science Based Targets Initiative’s (SBTi) standards, which clearly define pathways for companies to reduce carbon emissions in line with the Paris Agreement goals. In April 2022 we met with AES Investor Relations and its General Counsel to discuss setting science-based targets as the latest step in this path, and in line with SDG 13: Climate Action. At the meeting, AES confirmed it is exiting coal in 2025. The company continues to develop as a leader in renewable energy, in June 2022 announcing the formation with other leading U.S. solar companies of the U.S. Solar Buyer Consortium, which will invest more than $6 billion in solar panels to scale up domestic solar manufacturing.

Grasping Realities Behind Net-Zero Targets

Environmental impact is a major issue for the transportation industry, including logistics and freight companies such as portfolio holding United Parcel Service (UPS). exact engagements with the company have given us a better understanding of the challenges in lowering emissions in transport as well as where innovations may be coming from in the years ahead. In ESG-focused engagements in March and May 2022, we discussed UPS’s path to net-zero using science-based targets.

Though it has a 2050 net-zero goal in line with SBTi, UPS has issues complying with SBTi standards because aviation constitutes 60% of UPS’s Scope 1 and 2 emissions. This is an area over which UPS has little control, however, and the maximum exclusion for a source of emissions for SBTi approval is 5%. UPS has committed to a 2050 carbon neutral goal, which is the same as the SBTi’s goal, although UPS takes a different view of the first 15 years of the path, finding existing technology unable to warrant as aggressive a path as SBTi’s.

Over the course of our engagements, we discussed the technical challenges facing the logistics and freight industry and the state of several key technological developments that will be crucial to helping the industry continue to lower emissions. For example, UPS is looking to sustainable aviation fuels, which are biofuels used to power aircraft with a smaller carbon footprint than jet fuel; however, planting to create the enormous amount of feedstock required to replace crude oil is not sustainable. Electric aircrafts are another potential solution, and UPS will have the first of 10 electric aircraft by Beta Technologies delivered by 2024, with an option for 1,400 more. While these planes help time-sensitive health care deliveries and benefit small and medium-size businesses, they have a range limited to 250 nautical miles. A more sustainable path, particularly for long-range transportation, could be the use of hydrogen, but the technology and infrastructure is in nascent stages of development and largely out of UPS’s control. We have encouraged the company, however, to increase pressure on its suppliers to accelerate the development of these technologies. ClearBridge also has ongoing active discussions with aerospace manufacturers on these issues.

Connecting Governance and Long-term Shareholder Value

In addition to finding value in engaging on climate risks, net-zero targets and new technologies, we also add value to our investment process with engagements on a variety of governance topics. For example, we have long supported toy and game maker Hasbro’s (HAS) management and board on strategic, operational and ESG-related topics; the company ranks highly on almost all areas of ESG evaluation, including diversity at board and all-employee levels. We maintain long-term relationships with Hasbro management, and in April 2022, after an activist shareholder started pushing for strategic change at the company, we stepped up our dialogue with senior management and the board.

While we appreciate some of the concerns raised by the activist, we were against most of its suggestions, which we believed would be destructive to long-term shareholder value. We did not believe it was in our best interest to replace three board members with activist-nominated board members — the existing board is replete with talent from the media, technology, content, gaming, entertainment and social media industries.

Over multiple meetings with Hasbro’s CEO and CFO and as many as three board members, our strong relationships helped us better understand what changes would be made where appropriate, and what strategies would remain intact. We had frequent opportunity to share our thoughts on board composition, long-term strategic priorities, compensation, capital allocation and disclosures. All of these became import Topics for review during this time. In June 2022 the activist’s proposals were rejected by shareholders. We remain in support of management as it continues on its path of brand-building and growing digital content for its customers.

Advancing a Smart Farm Future

In our engagements with farm equipment maker Deere, we have followed new technology as it has developed from early promise of environmental and social benefits to market reality. In March 2022, Deere’s (DE) Chairman & CEO and CFO met with ClearBridge’s investment team in our New York offices. While prior to the pandemic we had regularly hosted the company, this meeting was among the most interesting as the relatively new CEO outlined a bold plan that placed improved environmental stewardship squarely at the center of the company’s future.

Industrial farming, at its core, is not an especially environmentally friendly enterprise. Agronomic practices have improved over time, but fertilizer, herbicide and pesticide applications and water usage remain problematic. Deere believes its precision farming technology can drive down chemical and fertilizer volumes materially — possibly by as much as 70% — as sensors and cameras attached to tractors, sprayers and combines help determine the exact level of chemicals that might be required. This more precise methodology is expected to: 1) Boost crop yields; 2) reduce farmer input costs; and 3) Boost overall land management capabilities. Farmers will make more money and grow more food to support global populations while at the same time better caring for the soil. There are also substantial environmentally positive knock-on effects because fertilizers largely are either carbon-based or mined.

There are also social benefits to Deere’s precision farming, such as increasing access to cost savings for smaller, non-commercial or family farms, and the contribution of improved crop yields toward SDG 2: Zero Hunger. This is in addition to its benefits for SDG 15: Life on Land through promoting sustainable use of terrestrial ecosystems. Deere’s technological strength also includes bringing connectivity to farmers in emerging markets, for example improving Wi-Fi access for farmers in Brazil.

New equipment pricing has moved much higher recently as Deere upgrades its offerings to support this effort. That said, the company has introduced substantial aftermarket packages so farmers using older equipment, who may not be able to afford completely new items, benefit from this technology.

Lastly, we discussed a timeline for transitioning large farm equipment away from diesel to an alternative fuel. At present, however, there is no viable alternative that has the power requirements necessary to drive a tractor for an hour, much less a full day, making any such transition a more distant opportunity.

Overall, we had been waiting to have this discussion for several years, and we were pleased the company’s technologies finally appear to have caught up to precision farming’s initial promise.


Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Fri, 15 Jul 2022 17:57:00 -0500 en text/html https://seekingalpha.com/article/4523722-clearbridge-appreciation-esg-strategy-portfolio-manager-commentary-q2-2022
Killexams : U.S. Service Sector Index at 2-Year Low, Employment Shrinks - ISM Survey No result found, try new keyword!The U.S. services industry slowed less than expected in June, but a measure of services employment dropped to a two-year low, suggesting that demand for labor could be ebbing as the Federal Reserve's ... Wed, 06 Jul 2022 02:05:00 -0500 text/html https://money.usnews.com/investing/news/articles/2022-07-06/u-s-service-sector-index-at-2-year-low-employment-shrinks-ism-survey Killexams : Manufacturing Growth Weakens to Two-Year Low as Orders Slump

[Stay on top of transportation news: Get TTNews in your inbox.]

A measure of U.S. manufacturing activity weakened in June to a two-year low as new orders contracted, restrained by lingering supply constraints and some softening in demand.

The Institute for Supply Management’s gauge decreased to 53 last month from 56.1 in May, according to data released July 1. Readings above 50 indicate expansion. The figure was weaker than most economists’ estimates in a Bloomberg survey, which had a median projection of 54.5.

The group’s index of new orders dropped nearly 6 points to 49.2, the poorest result since May 2020, when the economy was digging its way out of the pandemic-induced recession. Shrinking orders come as consumer spending slows under the weight of inflation and inventories pile up.

The ISM gauge of manufacturer inventories ticked up to 56, near the highest reading since 2010.

Timothy Fiore, chair of ISM’s Manufacturing Business Survey Committee, said that manufacturing growth was “held back by supply chain constraints,” with respondents noting that and pricing were their biggest concerns.

Fifteen manufacturing industries reported growth in June, led by apparel, textiles, printing, and computer and electronic products.

Stocks pared gains after the release, while Treasuries extended their advance and the dollar strengthened.

The results are consistent with several regional Federal Reserve bank surveys that show a clear pullback in June factory activity. Gauges of manufacturing in Texas and in the Fed districts of Philadelphia and Richmond dropped to the lowest levels since May 2020.

Data on June 30 showed U.S. inflation-adjusted consumer spending fell in May for the first time this year, reflecting a drop in outlays for goods.

In a sign that supply chains and capacity constraints appear to be easing, ISM’s measures of delivery times and backlogs both declined in June to the lowest levels since 2020. Meanwhile, the purchasing managers group’s production index climbed to a four-month high.

And for a third straight month, a gauge of price paid by producers declined, suggesting costs of raw materials are starting to ease. However, the index remains elevated and concerns about high petroleum prices linger.

The ISM’s employment index fell to the lowest since August 2020, suggesting firms are struggling to find workers.

— With assistance from Kristy Scheuble.

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Fri, 01 Jul 2022 03:09:00 -0500 en text/html https://www.ttnews.com/articles/manufacturing-growth-weakens-two-year-low-orders-slump
Killexams : ISM Manufacturing PMI on Tap — Data Week Ahead

The following are forecasts for this week's remaining U.S. data from a survey compiled by The Wall Street Journal.

Forecasts were last updated Monday afternoon.

 
DATE      TIME  RELEASE                    PERIOD     CONSENSUS    PREVIOUS 
          (ET) 
Friday    0945  S&P Global U.S. Mfg PMI     Jun      52.0    (7)    52.4* 
          1000  ISM Mfg PMI                 Jun      54.3    (24)   56.1 
          1000  Construction Spending       May     +0.3%    (19)  +0.2% 
 
*Jun Flash reading 
 
 
 
(Figures in parentheses refer to number of economists surveyed.) 
 

Write to Donna Huneke at dataweekahead@wsj.com

 

(END) Dow Jones Newswires

June 30, 2022 10:14 ET (14:14 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.
Thu, 30 Jun 2022 02:16:00 -0500 en text/html https://www.morningstar.com/news/dow-jones/202206307424/ism-manufacturing-pmi-on-tap-data-week-ahead
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