Displaying items by tag: esg

(San Francisco)

Barron’s has just put out a very timely list. The publication has compiled a list which ranks the 100 top companies according to sustainability. Sustainability, which is a component of and often linked to ESG, has become an increasingly important component of returns, so Barron’s rankings will likely make a difference to portfolios. The top ranked firm is Best Buy, followed by Cisco, Agilent Technologies, Texas Instruments, Voya Financial, and Clorox. The top 25 also includes Salesforce, Cummins, and Kellogg.

FINSUM: ESG is an increasingly important area not only for returns, but also for clients, so this is quite a handy list for what can be a surprisingly difficult to handle issue (i.e. deciding which companies are sustainable and not).

(New York)

ESG is growing steadily in the asset management community. More and more capital is being to committed to green bonds and other sustainable investments. Yet, as anyone who pays close attention will know, the definition of “green” or “sustainable”, is poorly defined. Academics have not helped, as their research—a big part of the movement—has somewhat muddled the power of the brand. Now, however, finance is demanding more research from academics, and both are aiming to work together more closely to deliver a better ESG product.

FINSUM: We can speak from experience in saying that when you get down to actual company selection according to ESG factors, it becomes very difficult to make any informed choices because of how little core data there is on which to make a decision.

(Washington)

Last week the DOL put out a warning to firms about launching and holding ESG investments. About the socially and environmentally conscious investments, the DOL reminded fund providers that fund performance needs to trump any social impact considerations of the funds. Despite the warnings, Bank of America has just launched five new model ESG portfolios.

FINSUM: What does this mean exactly? ESG portfolios have an explicit focus on social good, which at times could mean the funds either out- or under-perform. To us, this is an odd and pointless warning.

(New York)

Some may like it, some may not, but there is no changing the fact that ESG, or the acronym used to describe various social, governance, and environmental considerations when investing, is now part of the mainstream. Asset managers large and small, recently led by BlackRock, are now using ESG as a key factor in their investing. One asset manager comments that “In general, companies with the strongest records on employee relations and environmental sustainability, for example, often have better financial performance over the long run than those with the weakest records … Do you really want to hold a carbon-intensive company that’s not thinking about [the risks?”.

FINSUM: The big news here is that ESG and other “responsible” funds have had better returns in recent years than conventional funds, so the old mode of thinking this area has poor returns needs to shift.