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Recent Investment Thinking on ESG Issues

The green tide washes into bonds and alternatives

Although ESG has for obvious reasons taken a backseat in institutional investor considerations in the very short-term, it remains a critical issue on the longer term agenda of asset managers. As end-user interest shows a marked awareness of, and desire to include, ESG principles in savings plans and investments, product providers and asset managers will need to incorporate ESG principles into their decision making processes across a wider range of asset classes.

Savvy Investor features the most recent institutional thinking that addresses the ESG topic, several of which illustrate that integrating ESG thinking into the investment decision making process and across non-equity asset classes, particularly into fixed income, may offer financial as well as ESG benefits. 

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FEATURED PAPERS


ESG and the Cost of Capital (MSCI blog, 2020)

MSCI highlights the correlation between ESG scores and the cost of capital, generally finding that companies with high ESG scores tend to have a lower cost of capital, particularly in Emerging Markets.

Climate Change: The journey from denial to crisis (Aviva Investors blog, 2020)

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

It's over 40 years since concerns were first raised about human activities disrupting the climate; now we have a full-blown climate crisis. Aviva Investors highlights some of the implications for the financial sector.


WEBINARS AND PODCASTS


Webinar: How to Reconcile ESG and Factor Investing (Scientific Beta, 2020)

Scientific Beta explores how ESG objectives can be reconciled with factor investing and demonstrate the need to keep these two objectives separate.

Podcast: ESG - Through the Lens of Institutional Investors (PineBridge Investments, 2020)

In this podcast hosted by Refinitiv, Alessia Falsarone from PineBridge Investments offers her insights into how the adoption of ESG principles is creating opportunities for investors, particularly in emerging industries.


ESG IN FIXED INCOME


Expanding Green Fixed Income Markets: European pensions funds must do it now (Amundi AM, 2020)

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

Amundi AM illustrates the vast opportunity that exists in the fixed income markets for the issuance of various types of green debt, ranging from corporate bonds through to green securitized debt.

Green bonds stand to reap the rewards of sustainability (NN IP blog, 2020)

NN Investment Partners suggests that far from hurting returns, investing in green bonds can have a significant positive financial outcome for investors.

Sustainable Investing in Asian Fixed Income (Manulife IM, 2020)

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

Manulife IM suggests that in Asian Emerging Markets, the integration of ESG factor and sustainability analysis alongside fundamental credit research affords opportunities for active fixed income managers.

The Sovereign Transition to Sustainability: Understanding the dependence of sovereign debt on nature (LSE, 2020)

This paper from the London School of Economics suggests that in order to meet the 2030 SDG goals, sovereign governments will need to demonstrate their green credentials as ESG factors become commonplace in the various analyses undertaken by fixed income managers.


ESG: PRINCIPLES AND PRACTICAL APPLICATIONS


Evolving into an Eco-Friendly System: The real ESG challenge (Enterprising Investor blog, 2020)

This paper examines how capitalism, and the finance sector specifically, will need to adapt to meet the growing green consciousness.

Governance Challenges at Japanese Companies (Federated Hermes, Feb 2020)

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

Federated Hermes examines some of the key corporate governance issues they experience when engaging with Japanese companies.

Why Sustainability Matters in Real Estate (AMP Capital, 2020)

AMP Capital investigates a number of the ESG issues that we face, and explores the financial benefits that environmentally sustainable buildings might have on portfolio performance.

Sustainable Investing: Fast-forwarding its evolutions (KPMG/CREATE-Research, 2020)

KPMG collaborates with several partners to produce this report with responses from 135 institutional investors, hedge fund managers and consultants. It offers valuable insights into sustainable investing and its impact on the alternative investment industry .

Personal Values, Responsible Investing and Stock Allocation (Amundi AM, 2020)

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

Amundi AM suggests that if you offer responsible equity alternatives in savings plans, those investors are likely to allocate more to equities.

ESG investing - getting under the hood (DWS AM, 2020)

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

DWS AM highlights how ESG investing and the use of material extra-financial information is becoming an essential part of the investment decision making process.