Karina Funk, CFA, Co-Portfolio Manager and Chair of Sustainable Investing spoke at the US Focus Digital Event on 1st December.
Download the presentation slides from the event.
Sustainable investing is big and getting bigger. Signatories to the Principles for Responsible Investment (PRI) have swelled to over 3,000, representing over one hundred trillion dollars. 2019 was a record year for inflows into sustainable investments and this surge in popularity is reflective of a changing world with growing sustainability challenges. However this space is not monolithic; terms such as responsible investing, sustainable investing, ESG, and impact investing all mean different things to different people, and there have been many evolutions and iterations along the way.
Although there is a lack of standardisation around ESG data, ratings and company reporting, there is a lot of good ESG information out there today that can help investment managers to gain more insight and understand the basic question of how each company makes money. Translating imperfect ESG data into shareholder value is not straightforward, but we believe it can inform better investment decisions when combined with effective due diligence.
Whilst it is important to understand the ‘risk’ side of the equation, the ‘opportunity’ is just as significant: are these businesses actually improving their financial position by going after sustainability opportunities? We believe these opportunities exist in many areas of the economy in companies that are addressing critical and increasingly challenging sustainability issues. Ultimately, our goal is to gather more information to help us make better investment decisions.
Further Reading
- 2019 Impact Report: Large-Cap Sustainable Growth Strategy
- Navigating Our World Podcast (series 2, episode 1): Mick Dillon sat down with Alan Jope, CEO of Unilever, to discuss radical transparency, attracting the next generation of consumers and employees, shaping social and environmental change, the power of capitalism and the need to evolve it.
- The Materiality of The "S" In ESG