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Widening Our View of ESG Investing

ESG investing strategies—investing plans that align with a healthy environment, social responsibility, and good governance—are some of the fastest-growing strategies in asset management. According to a report from the US SIF Foundation, US institutional assets invested in ESG strategies reached $8.72 trillion in 2016, up 32.7 percent from 2014. ESG’s appeal isn’t limited to larger investors; ESG mutual funds are among the most talked-about consumer investment products on the market. Approximately $81 billion of environmentally friendly “green bonds” were issued last year, according to data from the Climate Bonds Initiative, providing institutional and retail investors a way to engage in ESG investing….

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Asness and Sorkin Miss the Point When It Comes to ESG

When a leading investment professional like Cliff Asness and a respected journalist like Andrew Ross Sorkin offer their opinions, mainstream investors tend to listen. It’s unfortunate, then, that both these pundits have recently added to the confusion about the impact of ESG on investment returns. More importantly, neither offer any practical insight into how to breakthrough this confusion and how to use ESG as a value driver for both investors and society. In a recent blog post titled “Virtue is its Own Reward: Or, One Man’s Ceiling is Another Man’s Floor,” Asness laid out his argument for why ESG investing…

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Incorporating ESG Considerations into Engagement Practices

Most of the discussion around environmental, social and governance (ESG) investing is about screening out companies that don’t fit specific ESG criteria. But investors who take this approach are missing an opportunity to drive change by engaging directly with companies and pushing for improved sustainability practices. The High Meadows Institute recently published a report that explores the different ways investors can engage with companies and provide evidence that shareholder engagement really works — in terms of both profit and ethics. For the purpose of this report, we examined both private and public engagement practices. Private engagement is the route used…

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Deutsche Bank ESG Investing Conference 2016

Earlier this month, High Meadows Institute President Chris Pinney joined colleagues in the corporate and financial sectors to discuss the complexities of climate risk and environmental, social and governance (ESG) investing. Deutsche Bank held its first annual ESG Investing Conference in Boston on November 1st to address the growing impacts climate change and short-termism have on businesses and investors. Hard hitting topics that were discussed throughout the day included the opportunities ESG integration presents investors in uncertain times, what the transition to a clean energy economy could look like for companies and communities, and what the ESG investment space is…

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Mainstreaming ESG in Capital Markets: Time for Industry Leadership

To date, the sustainability and social responsibility agenda for the corporate and financial sectors has been driven largely by external stakeholders. Previously this was characterized primarily by boycotts and campaigns against business organized by activists. Today, there is a much greater focus on engaging with business, seen through multi-stakeholder initiatives such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), which are focused on creating frameworks, standards and metrics for companies and investment managers to demonstrate that they are managing responsibly. While these initiatives have played a critical role in getting environmental, social and governance (ESG) issues…

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Business Leadership Tackling Big Challenges

Education, housing, healthcare, and transportation. These are the four top challenges the Alliance for Business Leadership attempted to solve during last Monday’s Leader Lab. The conference was the first in a series of convenings of progressive civic and business leaders set on finding solutions to the key issues effecting cities throughout Massachusetts. High Meadows Institute staff and a board member participated in the brainstorming sessions on all four challenges and found the following recurring themes emerged from the discussions. Increasing business participation in tackling these challenges is crucial. Governments and communities cannot do it alone. Business would benefit financially from improvements…

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Will 2016 be a tipping point for ESG integration in capital markets?

What a difference a year can make. When HMI finished a survey on the current state of play of ESG integration in global capital markets last spring, it seemed clear that the incentive systems needed to drive true environmental, social and governance (ESG) integration in mainstream capital markets, particularly in the US, were a long way off. While the efforts of UNPRI, SASB and the many other SRI programs are to be noted, our research showed that in reality these initiatives alone are insufficient to drive significant change for most mainstream asset owners and managers. As we start 2016, there…

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What will it take to move ESG from the margins to the mainstream in capital markets?

Judging from the $59 trillion in assets under management now committed to the UN Principle for Responsible Investment (UNPRI) and rapid growth of socially responsible investment funds, it would be easy to conclude we are well on the way to integrating sustainability or ESG into mainstream capital markets. A deeper look suggests a different story. Over the past year, the High Meadows Institute has been conducting research to understand the reality of how the mainstream institutions that shape capital markets approach sustainability. We have published a report on our findings available here. Our research shows that while many of the leading…

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Building a Framework for 21st Century Capital Markets

This spring, HMI is partnering with the Journal of Applied Corporate Finance to launch a major research project on the future of capital markets and the role for business leadership in capital market reform. Our goal is to identify the changes are now required if we are to build a sustainable governance and management model for capital markets that can ensure the vitality and independence of the asset management industry while serving the long-term interests of both investors and society. We have chosen to focus on the role of business leadership in capital market reform for three reasons: 1. Importance of the…

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Defining Sustainability

How often have we heard the words “what do you mean by sustainability?” Perhaps it avoids definition because sustainability applies to so many facets of our lives, to so many business or organizational strategies, to so many approaches we might take to moving to desirable outcomes. Does the notion of sustainability have a time period attached to it? One that says if you can keep something up for a certain amount of time you have crossed the threshold of sustainability?  In the world of environmental policy, sustainability has come to mean that if an organization is not meeting certain environmental…

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