Leading Business readership publication focuses attention on the dramatic rise of ESG factors in investing over the past five years in wrap up story…
If you have not yet seen the story by Randall J. Smith that appeared in The New York Times Business Section on December 14th, we urge you to read it now, and to share it with your colleagues. Especially those occupants of the C-suite, board room, investor relations office — this will help to make the important case for ESG / sustainable investing. It’s our Top Story this week and the headline puts things in focus: investors are sharpening their focus on “S” and “E” risks to stocks.
This is a front page, Business Section [Deal Book] wrap-up feature that shares news, commentary and important developments at such organizations as MSCI, Vanguard, TIAA-CREF, Goldman Sachs, Perella Weinberg Partners, Rockefeller Brothers Fund, US SIF, Heron Foundation, Parnassus and other leaders in sustainable investing.
“Investing based on ESG factors has mushroomed in recent years,” author Randall Smith explains, “driven in part by big pension funds and European money managers, trying new ways to evaluate potential investments.” The article helps those not yet familiar with sustainable investing to understand the increasing momentum in “sustainable” or “ESG” or “sustainable, responsible & impact” investing.
The organization MSCI is in sharp focus in the piece, with Linda-Eling Lee (the firm’s able head of global research) interviewed on the company’s approach to ESG research, ratings, equities indexes, and related work. At MSCI, the assets managed using ESG approaches is now at $8 billion-plus — that’s triple the 2010 level. ESG-related risks and opportunities are being closely evaluated as MSCI looks at publicly-traded companies, and as explained by the MSCI head of global research, 6,500 companies are followed by 150 analysts working in 14 global offices.
The recent US SIF survey results are heralded — $8.1 trillion in professionally-managed AUM assets in the U.S.A. are determined using ESG factors in analysis and portfolio management (the big driver is client demand). The TIAA-CREF Social Choice Equity Fund is at $2.3 billion in assets under management — doubling in the past five years. MSCI’s ESG indexes are at $3 billion — tripling over the past three years. Vanguard’s social index fund is at $2.4 billion — quadrupling since 2011. There’s a new CalSTRS low-carbon portfolio (using an MSCI index) set at $2.5 billion.
This article in the Business Section of a leading American daily newspaper provides an encouraging — and very timely! — look at the momentum that’s been building the capital markets signaling mainstream capital markets uptake and dramatic growth in adoption of ESG strategies and approaches for asset owners and asset managers.
As we suggest, it is a wonderful wrap-up of top-line developments in sustainable investing that also underscores the importance of corporate sustainability to individual institutional investors — and should help to make the investing and business cases for top management.
This news article is of course timely as corporate sustainability and sustainable investing professionals consider the potential changes on the horizon with a new administration and the new congress coming to town with a very different agenda – at least what has been publicly proclaimed to date. There is clearly momentum in the capital markets for consideration of corporate ESG factors as investment dollars are being allocated. This is good news heading into 2017 and the probable headwinds sustainability professionals will encounter.
Investors Sharpen Focus on Social and Environmental Risks to Stocks
(December 14, 2016)
Source: New York Times – Investing based on so-called E.S.G. factors has mushroomed in recent years, driven in part by big pension funds and European money managers that are trying new ways to evaluate potential investments. The idea has changed over the last three decades from managers’ simple exclusion from their portfolios of “sin stocks” such as tobacco, alcohol and firearms makers to incorporation of E.S.G. analysis into their stock and bond picks.