The four pillars of sustainability
We consider environmental, social, and governance (ESG) issues and sustainability themes in our investment strategies and stewardship activities because we believe they contribute to our number one priority: generating positive investment outcomes for our clients. We work closely with our clients to construct the right solution, and we organize our approach to sustainable investing around four key pillars:
Risk, return, and sustainability
Co-Heads Hannah Skeates and Chris McKnett share their views on global trends.
Environmental, Social, and Governance
Hannah Skeates: We live in a changing world. It’s changing for our investors. It’s changing for our client base. It’s changing for everybody who engages with the investment community. And that means that we have to come up with new solutions, exciting solutions, ones that we haven’t really considered in the past, so that we can solve for these really challenging issues of our time. As we see this technological transition play out and we think about our sustainability as a society and how we can live within this global context, I think it’s much more likely that we look at portfolios with a number of different metrics that we don’t currently utilize or see on a regular basis. Things like the carbon contained within a portfolio. Things like the impact that those portfolios will have on the general society. And be able to consider those in conjunction with more typical metrics and make overall decisions around whether or not we and our clients believe those to be appropriate.
Christopher McKnett: Moving forward, the three trends that we want our clients to be aware of are first, the financial conviction around the linkage between ESG (environmental, social, and governance) performance and investment risks and return. Two, the global public policy and regulatory agenda is very conducive and supportive of embedding sustainability and ESG considerations in the capital markets. And three, the data arms race. What I mean by the data arms race is making sense of the explosion of ESG information through advanced analytical techniques to make better, more informed investment decisions. From an investment perspective, we think about ESG as an additional set of information that our investment teams can harness to make more informed insights. And when we look at the composition of the market's value overall, we see more and more of it is comprised of intangible assets. These are things like the strength of its human capital, its environmental efficiency, the quality of its leadership and corporate governance. And ESG really helps illuminate a lot of these non-traditional drivers of investment value. And so, we think that a great company and a sustainable company today and tomorrow has to be operationally excellent, financially sound, and ESG proficient.
Our approach places significant value on best practices, and contributing to the development of ESG and sustainability concepts in the marketplace. We have close partnerships and involvement with leading industry associations, disclosures and standards bodies, nonprofit organizations, and other cutting-edge global initiatives. We look to help lead and drive the latest approaches in a practical and useful way.
Learn more about our involvement with sustainable investment and finance initiatives.