This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

How to Work with Clients to Integrate ESG Investing

By:

Head of Practice Management

Adoption of ESG investing and asset growth has accelerated. You can help clients pursue their goals by effectively integrating ESG principles into portfolios.

Environmental social and governance (ESG) investing tends to land in the spotlight during extreme events like the global pandemic. However, the trend line is unmistakable: ESG investing has been growing for a while. Between 2017 and 2019, ESG investing grew by more than a third, to $30+ trillion, over a quarter of the world’s professionally managed assets.1 Some estimates say it could reach $50 trillion over the next two decades.2

But exactly what is ESG investing? Some think it is all about investing for impact. Others think it is about imposing a certain set of values on companies.

Evolution of ESG Investing

ESG is about informing better decision-making by adding the assessment of material, environmental, social and governance issues to the investment process. It enriches traditional research like analyzing financial statements, industry trends and company growth strategies.

What began as a vehicle for expressing one’s values has evolved into a means of adding value to a portfolio. As State Street Global Advisors President and CEO Cyrus Taraporevala observes, “Addressing material ESG issues is good business practice and essential to a company’s long-term financial performance—a matter of value, not values.”

Click Here to Read the Full Article

Footnotes

State Street Global Advisors. “Into the Mainstream: ESG at the Tipping Point.” November 2019.
2 www.cnbc.com. “Your complete guide to investing with a conscience, a $30 trillion market just getting started.” December 14, 2019.
3 Gunnar Friede, Timo Busch & Alexander Bassen, “ESG and financial performance: aggregated evidence from more than 2000 empirical studies”, Journal of Sustainable Finance & Investment, Volume 5, Issue 4, p. 210-233, 2015. Benice Napach, “ESG-Focused Funds Are Outperforming During Pandemic, Think Advisor, May 21, 2020. Morningstar, “How Did ESG Indexes Fare During the First Quarter Sell-off?” April 8, 2020.
4 State Street Global Advisors. “Performing for the Future.” 2017 Survey.

Originally Posted on August 12, 2020 – How to Work with Clients to Integrate ESG Investing

Disclosures

The returns on a portfolio of securities which exclude companies that do not meet the portfolio’s specified ESG criteria may trail the returns on a portfolio of securities which include such companies. A portfolio’s ESG criteria may result in the portfolio investing in industry sectors or securities which underperform the market as a whole.

Investing involves risk including the risk of loss of principal.

The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street Global Advisors’ express written consent.

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from State Street Global Advisors and is being posted with permission from State Street Global Advisors. The views expressed in this material are solely those of the author and/or State Street Global Advisors and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

trading top