Columbia Threadneedle: Why ESG Strategies Will Disappear



Stockholm (NordSIP) – “ESG is going to go away eventually as an investment strategy and will just become part of a well managed company, but that is still a while away.” So says Ed Kerschner, chief portfolio strategist with the $467 billion asset manager Columbia Threadneedle. Investors will no longer need a separate investment bucket for companies with socially responsible practices in place in the future, Kerschner told Financial Advisors’ Karen DeMasters. Instead, companies achieving good returns and dividends will do so in part because they already have good ESG practices in place.

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“There are still people who believe you have to sacrifice returns to invest in socially responsible companies, but that has been proved false,” Kerschner said, pointing to the outperformance of the S&P average of Columbia Threadneedle investments with ESG measures in place. In addition, Columbia has a set of ETFs that take ESG investment objectives into consideration, considering these to be an indication of good management.

Investors and advisors need to do their homework to determine whether companies have acceptable ESG management practices, Kerschner said, suggesting they look to factors relevant to the industry under consideration, such as the relevance of child labour issues to retail investments, or water usage to manufacturing companies. “Having good practices in place and being transparent to the public is the responsibility of each company’s board of directors,” Kerschner said.

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In the current economic environment, even the strongest companies will face challenges from the impact of the COVID-19 pandemic. Perhaps now more than ever, understanding the factors that could have a material impact on a company’s sustainability will play a role in investment decision-making.

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