Stockholm (NordSIP) – Fund selectors from Skandia Liv Asset Management, Institut für Vermögensaufbau, Russell Investments, the Abu Dhabi Investment Council, Cass Business School and Inversis Gestion recently met to discuss the state of ESG investing, according to a press release.
The meeting was held under the purview of the International Advisory Board for Fund Selection (“the Board”), which gathers these six leading fund selectors to discuss the latest trends in fund selection.
The Board, which is sponsored by the Spanish funds platform Banco Inversis, discussed the use of exclusions, broader ESG integration as well as engagement with companies by investors and how ESG impacts performance.
The discussion noted the evolution of ESG integration beyond exclusions. Participants acknowledged that although many asset managers still see ESG integration simply as an additional piece of information others see it as the principal criteria for security selection and portfolio construction. The discussion also considered the fact that academic research, though inconclusive, “suggests ESG considerations are aligned with better performance, or at least not a structural detractor to performance” according to the press release. Participants also agreed that for clients with an ethical aversion to excluded investments lower returns may be less of an issue.
Geographically, members of the Board also noted the more advanced stage of ESG integration in northern Europe and Australia with North America while southern Europe continues to lag behind. Participants also remarked that the incorporation of sustainability factors is primarily driven by demand from clients whose increasing awareness of global sustainability issues. However, fund selectors are crucial to raising awareness of ESG factors among fund managers for whom developing an ESG approach still represents a business opportunity. Finally, members of The Board saw upcoming EU-regulations as “likely to stimulate transition towards greater use of ESG criteria by fund managers.”
The Board includes Per Lindgren, Head of Manager Selection at Skandia Liv Asset Management; Dirk Rathjen from the Institut für Vermögensaufbau; Adam Smears, Head of Fixed Income Research at Russell Investments; Ramon Eyck, Head of Emerging Markets – Equities at the Abu Dhabi Investment Council; Andrew Clare, Professor of Asset Management at the Cass Business School and Guendalina Bolis, Head of fund selection at Inversis Gestion.
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