Environmental. Social. Governance. Investing
Nathan Simon, Director, Strategic Asset Alliance
It’s not coming. It’s already here. Investment managers are flogging investment portfolios focused on Environmental, Social and Governance issues. Large pension funds and many non-US insurers are focused on it. But, not all E, S and G ratings are alike. And a positive E, S or G for one investor, could be a negative for another. Is their value in ESG? What should you be asking your manager about ESG?
Key Takeaways | View PDF
- ESG Investing is a strategy overlay to apply an organization's values to your investment portfolio.
- ESG Investing is not a separate asset class nor is it a political concept.
- MSCI is the current leader in rating companies on their potential value impacts (as it relates to ESG), but we expect ESG data approaches to converge as the industry matures.
- Underperformance continues to be dispelled, as studies increasingly show an ESG focus leads to positive corporate and investor results.
- The market as a whole is embracing ESG values, which implies investment portfolios will tilt-ESG over time, even without material action.
- Integrating ESG Investing should be respectful of the limitations that may be present on your organization and constituents’ values.
- At this stage, to prepare for potential stakeholder or regulator inquiries, an insurer or risk pool's investment policy could insert language to address ESG while the organization's approach to it is still being evaluated.