Rockefeller in Nordic ESG Conquest

    Stockholm (NordSIP) – Late May, Rockefeller Asset Management, a division of Rockefeller Capital Management, launched a UCITS version of long-standing equity strategies that integrate ESG research. On the margins of a recent panel entitled, “ESG Integration: Finding the Signal Amongst the Noise” hosted by Rockefeller Asset Management in Stockholm with participation from SASB, and hosted by Archipelago Partners, Rockefeller’s Nordic sub-distribution partner, NordSIP met with John “Chip” Montgomery (pictured below), Managing Director, Institutional Sales and Casey C. Clark, CFA (pictured above) Managing Director and Head of ESG Investments and talked about their experience in Europe so far and shared their opinion about what fund selectors should focus on.

    Chip Montgomery, Rockefeller Capital Management

    “We see increased and more consistent demand in Europe for sustainable investment strategies vs. the U.S. and other regions,” starts Chip Montgomery. “European asset owners, and specifically those in the Nordics, have long recognized the role of ESG investing for fiduciaries. Most investors in the region see it as we do: simply a better, more holistic investment approach – if done right.”

    From the recent fundraising experience, Casey Clark retains five key points that the most experienced investors researching external managers with ESG expertise focus on. First, Clark cites Proof of Integration. “A manager should be able to provide clear evidence of how ESG information is integrated into the stock selection process and list examples of where ESG information caused the manager to reconsider a potential purchase or recommend a sell,” he says.

    Then comes ESG Data. “How many data providers does the manager use to gain a comprehensive picture of a firm?” asks Clark. “Given the lack of standardisation in the industry, managers must aggregate ESG data from multiple sources.” The Shareholder Engagement Process is another crucial feature on Clark’s list. “Managers should have a process to prioritize engagement activity and be able to articulate clear objectives linked to targeted outcomes along with participation in sign-on letters and industry working groups. Shareholder engagement should expand beyond proxy voting,” he adds.

    The Team is, of course, another crucial component to examine. “What is the ratio of dedicated ESG staff relative to stocks under coverage? What is the team’s level of ESG expertise?” Last but not least, Dedication and History of ESG Investing should play a role as well. “How many years has the manager been integrating ESG analysis and deploying shareholder engagement techniques to elevate ESG standards globally? Is the firm a signatory or participant in working groups for the leading of ESG organisations such as PRI, SASB, and the UN Environment Program?” are the last key questions to ask an external manager.

    The two new UCITS funds, the Rockefeller Global ESG Equity Fund and the Rockefeller U.S. ESG Equity Fund are actively managed by co-portfolio managers, David Harris and Jimmy Chang, supported by a team of equity and ESG analysts based in the U.S who have worked together over many years. Both strategies seek to outperform their benchmarks – the MSCI ACWI-Net and Russell 3000, respectively – over a full market cycle defined as 3-5 years. The new Irish-based UCITS vehicles were seeded by long-term European institutional investors and are available to institutional and retail investors.

    According to Montgomery, the transition to a UCITS structure didn’t represent a hurdle. “Our long-standing strategies transferred into the UCITS framework with ease,” he says. “As expected, we had to make minor adjustments to conform to the EU regulatory environment and some special registration requirements by country, but much of this was simplified by our experience managing daily NAV funds in the US, Canada, and Japan. Our service providers were also quite helpful during the implementation phase.”

    For Nordic investors, active ESG strategies seemed particularly appealing. “In the Nordics, in general, we have seen a need for a high conviction long-only active equity strategies (v.s. indexation),” adds Montgomery. “Some countries have preferred Rockefeller’s 27-year track record in the Global ESG Equity Strategy, yet we also have seen demand, particularly in Sweden, for a standalone U.S. All-Cap ESG Equity Strategy. Rockefeller’s long-standing engagement approach, designed to drive shareholder value and lift global ESG standards, has also been of particular interest across all of the Nordics,” Montgomery concludes.

    Pictures © NordSIP

    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA is Editor-in-Chief for NordSIP and Managing Director for Big Green Tree Media. She has 18 years of experience in the asset management industry in Stockholm, London and Geneva, including as a long/short equity hedge fund portfolio manager, and buy-side analyst, but also as CFO and COO in several asset management firms. Aline holds an MBA from Harvard Business School and a License in Economic Sciences from the University of Geneva.

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