by Hank Boerner – Chair and Chief Strategist – G&A Institute
There is no doubt now — the world’s largest asset managers are definitely focused on corporate sustainability and sustainable investing (the two go hand-in-hand) as survey upon survey of investment professionals tells us.
In recent years we seen considerable momentum as asset owners and their managers adopt or further enhance their sustainable investing / ESG investing approaches. And to gauge the progress we’re seeing major, global asset managers busily taking the pulse of the capital market players.
For example UBS, the findings from one of the world’s leading asset managers, which regularly surveys asset managers. James Purcell, Global Head of Sustainable and Impact Investing at UBS Wealth Management shares the latest survey findings in a sponsored editorial post in the Harvard Business Review, and assures executive-level readers:
“Sustainability doesn’t mean one potentially has to give up returns. In fact it may be contributing to the investment process by adding more pertinent non-financial information. In this, we have reached a ‘why not’ moment.”
UBS, the commentator explains, is ambitious in wanting to shape the future of sustainable investing because the company believes these investments can help clients pursue investments according to their values. And – because UBS is confident that sustainable investing will remain a widely-accepted way of investing.
In the content shared on the HBR platform, the company explains the signals that sustainable investing should be seen as a lasting, major force in the capital markets. Among these signals:
- Urgent challenges such as climate change (presented to both companies and investors).
- The Paris Agreement on Climate Change, the UN Sustainable Development Goals (SDGs), the aims of the EU High Level Expert Group on Sustainable Finance – all of these actively suggest solutions to global challenges that are now at a scale demanding critical mass. (We have but 10 years to go to change the direction of perilous global warming, science experts tell us.)
- At the same time, customers, shareholders and employees are aligning their values and leveraging their investments for the public good. That is impacting (positively) sustainable investing.
- In turn, this trend creates new demands on institutions to make ESG performance and sustainable investment part of the long-term strategy.
- Asset owners are heeding the call – see the Principles for Responsible Investing (PRI) for reports on the progress of asset owners (the PRI signatories) and their asset managers. (PRI was launched in 2006 with 63 investment companies committing to incorporate ESG issues into investment decision. This year there are 2,450 signatories representing US$82 trillion in collective AUM!)
- Three of four asset owners surveyed by UBS say that they consider ESG management approaches and results as one of the key issues looked at when choosing an asset manager.
- These and other factors (outlined in the Harvard Business Review commentary) are clear demonstration – important signals! — of the extent to which the mainstreaming of ESG has evolved over the most recent years.
In the 2018 UBS Investor Watch Global Survey, 81% of respondents said they wanted to align their consumer spending patterns with their values.
In the 2019 UBS survey of investors (“ESG: Do You, or Don’t You?”) more four-of-ten respondents said they already have sustainable investments in their portfolios and expect a positive impact on financial performance. Eight-of-ten respondents said they thoughts “sustainable companies” were good investments (they’re perceived as better managed, more forward-thinking).
In 2019, UBS teamed with Responsible Investor to gauge the extent of ESG investing. Europe had the highest proportion of asset owners active in ESG investing (82% of owners). North America is catching up with 70% of respondents saying they were “do-ers” (making ESG material their day-to-day activity) and 19% were “adopters” (not yet focused day-to-day on ESG but planning to integrate in the future).
Just in time!
Opening this week’s COP 25 meetings, UN General Secretary Antonio Guterres challenged those assembled at the Conference of Parties’ gathering (and millions more tuning in) by asking – Do we really want to be remembered as the generation that buried its head in the sand, that fiddled while the planet burned? (Or, follow of path of resolve, of sustainable solutions).
The UBS commentary is a message of hope – and there is a handy sidebar explain sustainable investing which is of value. We invite your reading of this week’s Top Story and the other items (including more sustainable investment items) that Editor-in-Chief Ken Cynar and the G&A team has selected for you this week.
Is Sustainable Investing Moving Into the Mainstream?
Source: Harvard Business Review – Sustainable investing, which incorporates environmental, social, and governance (ESG) criteria into investment decisions, has been gaining more attention among both individual investors and asset managers in the world’s largest…