by George Strobel, Forbes Financial Council Member

Environmental, social responsibility and good governance (“ESG”) standards for business conduct continue to rise in importance as a result of the economic chaos and human suffering caused by the Covid-19 pandemic. While companies are developing more comprehensive criteria, the standards are far from consistent. The reasons for the inconsistencies are numerous, but of greatest concern is the bias of ratings and the lack of public disclosure about the criteria and standards used in making those ratings.

Consequently, unlike financial information reporting, which has relatively standardized, disseminated and objective criteria, the information provided to ratings agencies varies widely by company and lacks verifiability. Even worse, the basis used for evaluating this information is secretly maintained and lacks peer or public review. The result is that the investing public is provided ratings scorecards that are at best inconsistent, subjective and nonverifiable. At worst, the ratings mislead the investing public. The SEC has made note of these failings in its investigation of purported “ESG” focused funds.

One positive outcome of the pandemic is the increased focus on social and governance factors.

Given the desire for more balanced ESG reporting, now should also be the time for the generation of a more functional ESG rating framework. That requires the adoption of objective standards among ratings agencies. By implication, that means subjective criteria and evaluations must play a reduced role in the final ratings report. The objective is for thepublic to have access to the standardized ESG reports, the outcomes of which are not dependent on the firm preparing the report. The goal would be to move far closer to what investors receive in the financial reporting world where the results of a financial audit are not dependent on whether it is prepared by a global auditing firm. The same cannot be said for today’s ESG reporting.

Read the full article here.

Carlyle’s 2020 Impact Report

Electricity generation is one of the largest sources of global greenhouse gas emissions, accounting for approximately 28% of U.S. emissions alone – almost two-thirds of our electricity comes from burning fossil fuels. As renewable energy costs continue to fall, regulations tighten, and the energy transition accelerates, however, there is a large and growing investment opportunity in building the renewable energy capacity required to power a lower-carbon US electricity grid.

In 2019 Carlyle’s Renewable and Sustainable Energy Platform led a $100 million commitment to partner with Alchemy Renewable Energy on a newly-established company, Cardinal Renewables, to develop, acquire, finance and operate solar power generation projects throughout the United States – including a dozen operating assets and a pipeline of development projects.

Partnering with Carlyle’s best in class Renewable and Sustainable Energy team opens distinctive opportunities to drive forward the energy transition. Our combined deep market expertise and Carlyle’s long-standing relationships with corporations and utilities will be instrumental in enhancing project, and economic, value creation.

Lacie Clark, CEO of Alchemy Renewable Energy

Read the complete case study.

The South Carolina Legislature has passed House Bill 3998, the Workforce and Senior Affordable Housing Act, creating a state tax credit for qualified affordable housing developments.

The South Carolina State Housing Finance and Development Authority sees this as a significant step toward addressing the affordable housing crisis in South Carolina and providing safe, decent and affordable housing for all South Carolinians. Housing will begin allocating this tax credit in the 2020 application cycle.

Our mission is to create quality affordable housing opportunities for citizens of South Carolina.  

The Housing Tax Credit Program (LIHTC) is designed to provide for-profit and nonprofit developers with an incentive to create and maintain affordable housing. This is the country’s most extensive affordable housing program.

Our mission is to create quality affordable housing opportunities for citizens of South Carolina.  

The Housing Tax Credit Program (LIHTC) is designed to provide for-profit and nonprofit developers with an incentive to create and maintain affordable housing. This is the country’s most extensive affordable housing program.

Owners of and investors in qualifying developments can use the credit as a dollar-for-dollar reduction of federal income tax liability. Allocations of credits are used to leverage public, private and other funds in order to keep rents to tenants affordable.

SC Housing

PV MAGAZINE, JEAN HAGGERTY

Renewable energy industry officials are hopeful that a post-pandemic comeback is possible in 2021, but much will depend on whether the Covid-19 disruption is short lived and on how future pandemic-related legislative activity pans out.

One thing that’s already clear is that the potential for supply chain difficulties cannot be ignored, particularly if there is a post-pandemic surge in demand.

“Supply chain issues haven’t played out yet,” said George Strobel, co-founder and co-CEO of Monarch Capital.

A lot of the materials for projects planned for this year were ordered in 2019. However, in a worrying sign, the virus has forced solar manufacturer SunPower to idle its factories and cut its workforces. Additionally, industry officials are already reporting project delays, and that projects are missing developmental milestones due to state and local permitting delays, having to work projects with smaller crews and difficulties related to traveling to sites, among other issues.

Read the full article here.

Annual Report for Fiscal Year 2019

National Park Service, U.S. Department of the Interior, Technical Preservation Services

A Successful Federal/State Partnership Since 1976

The Federal Historic Preservation Tax Incentives Program, administered by the National Park Service in partnership with the State Historic Preservation Offices, is the nation’s most effective program to promote historic preservation and community revitalization through historic rehabilitation. With over 45,000 completed projects since its enactment in 1976, the program has leveraged over $102.64 billion in private investment in the rehabilitation of historic properties—spurring the rehabilitation of historic structures of every period, size, style, and type in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

The Historic Tax Credit is the largest Federal program specifically supporting historic preservation. It generates much needed jobs and economic activity, enhances property values in older communities, creates affordable housing, and augments revenue for Federal, state, and local governments, leveraging many times its cost in private expenditures on historic preservation. This widely-recognized program has been instrumental in preserving the historic buildings and places that give our cities, towns, Main Streets, and rural areas their special character and has attracted new private investment to communities small and large throughout the nation.

by George Strobel

References to concepts like ESG, impact investing, social responsibility, carbon footprint initiatives, sustainable investing, climate change, green or sustainable funds and other related concepts are at every turn now in the business media. Collectively, these can be referred to as “do good” precepts. This is not a new development. It’s been ongoing for the past 20-30 years.

Whether or not you believe in climate change, sustainable renewable energy — which is cheaper in many cases and cleaner than fossil fuels — makes sense. Urging corporations to be mindful of the impacts they have on the communities they operate in is not a bad thing. While Europe is 20 years ahead of the U.S. in the integration of these concepts in standard business mantra, attention to these concepts in the U.S. is accelerating. But the new focus is on more than just climate change. What are these concepts, and how are they affecting business?

ESG

Today, it is standard for a public company to have an ESG report, a sustainability report or perhaps a social impact report included in a U.S. public company’s annual report. So first, let us briefly discuss many of these more popular concepts. ESG stands for “environmental, social and governance,” and it generally represents the most broadly applicable factors for evaluating the stewardship of a business.

The “environmenal” part of ESG examines how the business is operated in a sustainable manner from a global ecological perspective. This would clearly include attention to mitigating the business’s carbon footprint and other global warming concerns, such as energy consumption, energy efficiencies and sustainability of the materials it uses, and its manufacturing and business processes. It would also include issues like water quality, waste removal and processing, etc.

The “social” prong of ESG relates to the overall social impact, both internally and externally, of the business and its products in the communities it serves. Does it have policies to combat discrimination of employees based on sex, gender, religion, age or any other relevant basis? Does it have programs or spend money assisting the communities in which it operates and serves with preventative health programs, medical assistance, basic educational assistance or similar programs? In other words, are the communities in which the business operates otherwise enhanced aside from the jobs and taxes created by the business?

The “G” part of ESG stands for “governance.” This prong entails several things. For instance, is the decision-making process of the business open and straightforward? In times of crisis, does the company hold back information, or is it open with the public? Does the voting regime of the company reflect the economic rights of its shareholders?

Related Concepts

Read more on the related concepts and lack of standards here.

Monarch Private Capital is proud to play a role in the new future of St. John’s Seminary… which was made possible by tax equity investments.

Novogradac article by Caroline Gallegos 

St. John’s Pre-seminary High School (St. John’s Seminary) in San Antonio, Texas, is being rehabilitated thanks to historic tax credits (HTCs) and low-income housing tax credits (LIHTCs) and will become The St. John’s Apartments.

The development will provide 228 apartments, 75 percent of which will be available to those who earn between 30 and 60 percent of the area median income (AMI).

St. John’s Seminary was built in 1920 adjacent to Mission Concepción, which was designated a National Historic Landmark in 1970 and is now a part of the San Antonio Missions National Historical Park, which includes Mission Concepción, San José, San Juan and Espada. The park, along with the Alamo, was designated a UNESCO World Heritage Site in 2015.

Read the full article.

“Being from San Antonio and participating in the transformation of the historic Catholic Seminary into St. John’s Apartments has held special significance for me,” said Robin Delmer, Monarch Private Capital’s Co-CEO and managing director of acquisitions. “Not only are we preserving history, but also building attractive affordable housing that will stimulate growth and community in the area. Monarch Private Capital admires the dedication of so many involved bringing this initiative to fruition.”

Congratulations Hotel Retlaw for being featured in PREMIER HOSPITALITY INTERNATIONAL MAGAZINE! View the article here.

Hotel Trundle and architect, The Boudreaux Group, have been recognized with a national award for adaptive reuse and design. Hotel Trundle is located in Columbia, South Carolina.

The project, which renovated three buildings at the corner of Taylor and Sumter streets into a boutique hotel and new offices for Boudreaux, won the commercial project category in commercial real estate publication GlobeSt.com’s 2019 Adapt Opportunity Zone awards.

The awards highlight companies which have demonstrated ingenuity, creative thinking and problem solving in rejuvenating underutilized buildings, according to a news release.

“It is exciting to be recognized among projects from larger cities like Atlanta, Seattle and Philadelphia,” Heather Mitchell, Boudreaux president, said in the release. “This is just further evidence of the forward momentum in Columbia and, even more, the power of creativity and perseverance to reenergize the historic cores of downtowns across our state.”

Read the full article here in the Columbia Regional Business Report. 

Hotel Trundle is a boutique hotel that was transformed with the help of historic tax credits. Monarch Private Capital is proud to been a part of this innovative project which opened April, 2018!

Contact us for more information about ESG Investing, state and federal tax credits.