Impact Investing

At the final General Session of the 2020 NTSA Summit, “Leveraging ESG to Take Your Practice to New Heights,” William Burckart, President & COO of the TII Project, introduced the audience to the why, what and how of ESG investing, which integrates the environment, social, and governance factors.

 

Sustainable investing is growing and it’s good for business. A number of studies show that up to 90% of millennials and 70% of women care about ESG investing.  And ESG investing actually can enhance financial performance.

 

Historically, it was thought that this type of investing underperformed, but now — across all asset classes — ESG investing can meet, or even outperform its non-ESG counterparts. ESG accomplishes its goal by avoiding investment in certain companies, emphasizing certain concerns, especially those that are inclusive, and engaging directly with companies that incorporate advocacy and active ownership.

 

Guillame Mascotto, the VP head of ESG & Investment Stewardship, for American Century, emphasized that ESG means different things to different people. There are not global standardizations, and all approaches are not mutually exclusive. At American Century, 30% of AUM is aligned with ESG integration, and their objective is to hit 65%.

 

Brooke Herren, CFA, Mutual Fund Research Analyst for Security Benefit, explained their goals are to provide ESG choices and educate advisors on this impactful type of investing. She said that often, clients will ask the advisor about ESG investing, and she hopes the financial advisor will be prepared.

 

Mascotto added that millennials are the first truly transnational generation. Investors in Japan care about the environment, as do American investors.

 

So, what I heard, and what I have always believed, is that we can “do good” while “doing well” (understanding that past performance is no indication of future results).

 

There are resources available to learn about sustainable investing, and many more are being developed. Check out the MSCI website for ESG 101, or the various investment companies’ websites or Burckart’s study, to name a few. 

Tamara Indianer, CFP®, AIF®, RVP is New England Lincoln Investment Chair, NTSA CRES Committee.