ESG and Impact Investing: Compelling Facts

The Tenbar Group

 

Asset growth in environmental, social, governance and impact mandates (“ESG/I”) is in the billions. 

 

ESG/I investing is being applied by institutions, family offices, mutual funds, and high net worth advisors to

mission-align portfolios and investments to meet client goals.

ESG/I has independent standards and metrics to quantify and assess outcomes, offers competitive returns across all asset classes and investment vehicles, and has customizable indices and benchmarks. 

 

  • Over $2,600 billion in assets under management in over 1,000 Pooled Investment vehicles (Mutual Funds, Alternative Investments) now incorporate ESG/I into the investment process.

 

  • $2,710 billion US State and Local pension funds apply ESG/I into their investment process.

 

  • The $300 billion California Public Employees Retirement System (CalPERS) requires ESG screens for all investments.  CalPERS recently launched a Sustainable Investment Research Initiative and Targeted Investment Program.

 

  • JP Morgan Chase, UBS and Morgan Stanley have specific teams in Investment Banking (Underwriting, Direct Investments), Asset Management, Research and Wealth Management to actively run those firms’ ESG/I initiatives.

 

  • Bank of America reports 85% of millennials in line for wealth transfers are interested in or currently actively managing their portfolios applying ESG/I screens, particularly women.  Overall, clients of the bank had more than $11.3 billion managed in ESG/I mandate portfolios.

 

  • The fastest asset growth among High Net Worth Separately Managed Accounts focusing on fixed income were those with ESG/I mandates.

 

  • In the US alone, ESG/I assets have increased 33% to nearly $9 trillion from 2014 to 2016 (US Forum for Sustainable and Responsible Investing).

 

  • The Ford Foundation committed $1 billion of its endowment to ESG/I investment parameters.

 

  • MSCI, S & P Dow Jones Indices, Bloomberg/Barclays and FTSE established benchmarks for institutional investors to measure and report performance.  Currently, there are over 500 ESG/I Indices, both domestic and international, equity and fixed income.

 

  • Data, Ratings and Methodology from information leaders such as Moody'sBloomberg, S & P Global Ratings and Bloomberg create trackable disclosure metrics with defined attributes to objectively create and assess ESG/I compliant guidelines.

 

  • Harvard University’s Initiative for Responsible Investment (Kennedy School of Government), Wharton School of Business Social Impact Initiative and the Stanford Graduate School of Business Social Impact Program as well as other academic institutions are actively studying and offering degrees in ESG/I investing, principles and management.

 

  • The Sustainability Accounting Standards Board sets industry-specific standards for corporate sustainability disclosure, with a view towards ensuring that disclosure is material, comparable, and decision-useful for investors.  The Chair is Michael R. Bloomberg.

 

  • Increased regulations from Boards of Directors to Government policy makers are compelling ESG/I data disclosure codification.

 

  • Warren Buffet (Berkshire Hathaway), Jamie Dimon (JP Morgan Chase), and Larry Fink (Blackrock) and others created “Commonsense Corporate Governance Principles” to encourage corporations to move from quarter-to-quarter performance and take a longer term and more global perspective in decision making. 

 

In this competitive financial services environment, a firm that does not offer an ESG/I investment mandates and an independent, objective firm to evaluate those is at a competitive disadvantage.  Not only does the firm potentially lag in bringing in new clients, hence diminishing asset growth, but also risks retaining existing assets and, more broadly, having the firm’s brand appear out of date.  

The Tenbar Group, with experience institutional investors, wealth managers, financial planners, and investment advisors, welcomes the opportunity to work with you in exploring the various options available to building out an ESG/I effort best suited for your firm and your clients—existing and future.

Contact Us HERE

 

Barnet Sherman

617-799-3576

bsherman@tenbarcapital.com

© 2019 Barnet Sherman. All Rights Reserved.