Our investment professionals and environmental, social and governance (ESG) specialists take on topics that matter.
Does focusing on ESG mean sacrificing returns?
We believe incorporating material ESG information into investment decision-making can improve outcomes for investors. Poor governance can expose issuers to greater downside risk. And, in terms of potential upside, some long-term studies indicate that ESG-focused funds have outpaced broad market benchmarks over time. (Morningstar*, MSCI†)
Can bond investors really have any influence on issuers?
Equity investors may take the spotlight, but bondholders can be more influential on issuers than is widely believed. And, looking forward, their influence and potential for impact look set to grow as the world tries to close the US$100 trillion1 funding gap associated with meeting the UN Sustainable Development Goals.
Do ESG ratings give investors a clear view of how an issuer is faring?
Ratings from third-party providers can vary widely because of different methodologies and data; they can also miss nuances that bottom-up fundamental research discerns. We consider ratings as one of many inputs, but always go deeper — using proprietary tools, frameworks and insights to evaluate material ESG issues.
Does sustainable investing make diversifying a portfolio more challenging?
It’s limiting to solely focus on an individual sector, a green theme or just those issuers with stellar ESG ratings. That’s why we favor viewing opportunities through a multithematic lens that aligns to the UN Sustainable Development Goals.
The UN Global Compact and UK stewardship code are just two of the industry-related groups and initiatives that we've joined. Learn more and also find our ESG policy statement and global proxy policy here.
1 Force for Good, 2021. Capital as a Force for Good: Capitalism for a Sustainable Future
* Hortense Bioy, “Do Sustainable Funds Beat Their Rivals?,” Morningstar, June 16, 2020. † Raina Oberoi and Guillermo Cano, "Quantifying ESG fund performance," MSCI, April 6, 2020.
All data as at 31 December 2021 unless otherwise stated. Source: Capital Group
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