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ESG: Changing Attitudes, Changing Approaches

Style and Process in the Spotlight

Investor and asset owner approaches to ESG investing continue to evolve, with more now considering it mainstream and an integral part of any house style or investment process. There has also been a discernible shift away from the use of negative screening or exclusion criteria towards proactively engaging with companies and interacting with their management teams in order to bring about more positive outcomes.

This selection of papers includes updated insights into attitudes towards sustainable investing and commentaries on the application and incorporation of ESG principles into institutional investment management style and process. Other papers investigate the negative impact from COVID-19 on global recovery plans and its knock-on effects on the attainment of the UN Sustainable Development Goals (SDGs).

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2020 Smart Sustainability Survey of Asset Owners (FTSE Russell)

FTSE Russell’s fourth Smart Sustainability Survey uncovers more fascinating insights into the continuing growth in sustainable investment and ESG by asset owners. More are considering the use of sustainability criteria in smart beta strategies, while there is also a marked decline in the use or application of negative screening to ESG investing.

A Consistent Approach to ESG Investing (QMA, 2020)

Gavin Smith, PhD, Head of Equity Research and Portfolio Manager, outlines the approach taken by QMA in providing a framework for sustainable investing. He also highlights several of the issues faced by many asset owners when considering sustainable investment management solutions.

Taking the Lead on ESG Investing Through Client Communications (SimCorp, 2020)

SimCorp highlights a recent roundtable discussion which explores how effective ESG data management can be positively integrated into both front and back office process. They believe a positive feedback loop can arise, which may be beneficial in the attraction of new business.

The Role of the Corporate Board in Addressing ESG changes (Calvert, Feb 2020)

For compliance reasons, this paper is only accessible in the United States

Calvert highlights a recent report by the National Association of Corporate Directors (NACD) that provides guidance to boards as to how they might address the rapidly changing operating and competitive landscape, particularly with regard to how E, S and G issues might impact upon the corporation.

A ‘Consultivist’ Approach to Company Engagement (PineBridge Investments, 2020)

PineBridge Investments’ Global Head of Equities, Anik Sen, explains how they approach company engagement, seeking to both enhance investment performance and invoke positive change in a company’s ESG credentials.

Podcast: ESG - One size does not fit all (Federated Hermes blog, Aug 2020)

In this podcast, Federated Hermes experts outline why an integrated, active approach to corporate engagement may prove beneficial, especially when considering how ESG factors relate specifically to individual companies.

Tackling Inequality Through ESG and Active Ownership (Invesco, 2020)

For compliance reasons, this paper is only accessible in certain geographies

Invesco suggests that when it comes to ESG issues, investors tend to consider Governance first, followed by Environment and then Social. However, the COVID-19 crisis has highlighted many social inequality factors which may predicate a rethink towards more holistic and non-hierarchical solutions.

Integrating Carbon Data into Investments (Intech blog, Jul 2020)

For compliance reasons, this paper is only accessible in the United States and Canada

Intech argues that carbon emissions (CE) are becoming an almost standalone consideration for asset owners and investors within the ESG space as CE can often have the most dramatic effect on investment performance via short-term active risk. Getting precise and reliable data can pose its own challenges, but they are not insurmountable.

ESG in LGIM’s Active EMD investment process (LGIM, Jul 2020)

For compliance reasons, this paper is NOT accessible in the United States and Canada

LGIM illustrates how ESG considerations play an integral part in the investment process of the Active Emerging Markets Debt team.

The Impact Investing Market in the COVID-19 Context (GIIN, Jul 2020)

GIIN notes that since the COVID-19 pandemic, several factors are impeding investor attempts to undertake due diligence, while highlighting a range of strategies that investors are deploying in order to circumvent such issues.

Impact Investing: Dual-purpose investing (Candriam, Aug 2020)

For compliance reasons, this paper is only accessible in certain geographies

Candriam’s paper outlines the potential scale of the impact investing market. For example, UN estimates suggest a need for some $2.5 trillion to avert a range of issues including food insecurity, pandemics, and climate change. They also provide a framework for investors to consider and present a range of case studies to indicate the ways in which impact investing can be implemented.

Recover Better: Economic and Social Challenges and Opportunities (UN, Jul 2020)

This UN document reflects on the impact of COVID-19 and how a slowdown in the global growth outlook might impinge upon achievement of the Sustainable Development Goals (SDGs).

EU Recovery Plan: A bold step, with caveats (PineBridge blog, Aug 2020)

PineBridge Investments examines the recent €750bn ‘Next Generation’ recovery plan from the EU and is initially encouraged by what it sees, but notes that caveats remain, particularly in relation to the plan’s implementation.

Real Estate: Investors Demand Meaningful ESG Progress (Metlife IM, Jul 2020)

MetLife IM argues that property owners may be missing a trick by focusing mainly on risk mitigation. They suggest a more holistic approach encompassing sustainability goals for properties, occupants and the collective well-being of society, might be more beneficial.

Video: Sustainable Investing in the pandemic and beyond (Manulife IM, Jul 2020)

For compliance reasons, this paper is only accessible in certain geographies

Margaret Childe, Head of ESG in Canada at Manulife Investment Management, speaks with other Manulife ESG experts on how COVID-19 has affected the outlook for ESG risk, revealing new ways in which investors need to assess such risks.

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