Surveying the Investment World through an ESG Lens: A Snapshot of Key Topics from the US

Environmental, social and governance (ESG) topics have never been more prominent in investors’ minds than they are today. But there’s considerable variation among investment managers about how ESG is considered or integrated. Fresh from a series of ESG conferences in the United States attracting investors, managers and scientists, Julie Moret, Head of ESG at Franklin Templeton, outlines five topics that sparked her attention and that investors with an interest in ESG should have on their agenda.

ESG is now part of the investment mainstream. No longer a niche consideration, ESG represents a structural shift in the industry that is here to stay. It continues to generate growing levels of interest and awareness, as attendance figures for two high-profile ESG conferences in the United States at the end of last year show.

Both the Responsible Investor (RI) Americas Conference (in its 10th year) and the Sustainability Accounting Standards Board (SASB) Symposium drew record crowds (including us) to their events in December 2018.

More important than the growing number of attendees at these events, in our view, is the growing number of mainstream asset managers present. We think that reflects just how seriously the industry is taking this issue.

However, there remains plenty of variation about what exactly ESG investing entails. As we survey the global investment landscape, we’ve identified five ESG themes we think could drive activity and decision-making in 2019.

The Importance of ESG Integration

Our experience, including feedback from events such as the RI Americas Conference and the SASB Symposium, indicates clients are increasingly looking for an integrated approach to ESG from investment managers.

This is also supported by findings from the US and European arms of The Forum for Sustainable and Responsible Investment, USSIF and EUROSIF.

USSIF’s latest US Sustainable, Responsible and Impact Investing Trends report revealed ESG integration to be the most commonly reported strategy among the asset managers and owners that responded to the survey, both in terms of the assets involved and number of money managers employing it.1

Meanwhile, a market study from EUROSIF, published in November 2018, showed ESG integration as the most prevalent and fastest growing approach.2

Still, across the investment management landscape, there continues to be a wide variation in the depth and breadth of ESG integration processes.