Five ways ESG can drive growth for your business
ESG specialists analyze big trends and ideas for integrating ESG into portfolios.
But how can investment professionals do a better job of engaging clients in a meaningful ESG conversation about personal preferences and delivering the performance results they expect?
In a recent Natixis Access Series event, Nathalie Wallace, Head of ESG Strategy and Development at Mirova, and Ed Farrington, EVP of Institutional and Retirement at Natixis Investment Managers US, share insight and best ideas on when and how to leverage ESG to better engage and deepen relationships with clients. Moderator David Goodsell, Executive Director of Natixis Center for Investor Insight, highlights key findings from the latest ESG survey.
Key takeaways from the webinar:
- ESG factors may help deliver performance: One of the biggest myths investors have heard is that using ESG factors in investment processes can hurt performance. “In fact, there is plenty of evidence that it’s the exact opposite,” says Wallace. “We think that investors who are looking at ESG considerations to allocate capital and make investment decisions actually are likely to outperform investors who are not assessing these ESG opportunities and risks.” Mirova believes the ESG performance opportunity is a key element of the momentum behind sustainable investment products.
- ESG can help deepen client relationships: Financial professionals say the number one way to grow their business is to demonstrate value beyond asset allocation and get to know clients on a personal level.2 Wallace and Farrington agree that is why it’s critical to understand an ESG client’s true motivations: Is it to become a more informed investor? Is it to make a better world? Or is it both? It’s critical to solicit and answer client questions like “What impact is my dollar having when I invest in this company?” “What impact is the company having on the world?” Once you understand the motivation of the client, you can begin to have a meaningful dialogue and then draw on the appropriate ESG implementation strategies they are asking for.
- ESG can offer investment transparency: Investors now expect fund managers to look at more than the financial aspects of an ESG investment.1 Wallace emphasizes they want them to be actively engaging with companies that have integrated investment teams, an ESG research team, and corporate engagement teams – in other words, a true holistic approach to analyzing a company. This can be done by hiring managers that offer sustainable expertise, ESG risk expertise, and engagement expertise. Offering this kind of 360-degree transparency can help clients understand companies from a fundamental, financial and research perspective, as well as a sustainability and ESG viewpoint.
All investing involves risk, including the risk of loss. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment prior to investing.
Sustainable investing focuses on investments in companies that relate to certain sustainable development themes and demonstrate adherence to environmental, social and governance (ESG) practices, therefore the Fund’s universe of investments may be reduced. It may sell a security when it could be disadvantageous to do so or forgo opportunities in certain companies, industries, sectors or countries. This could have a negative impact on performance depending on whether such investments are in or out of favor.
The data shown represents the opinion of those surveyed, and may change based on market and other conditions. It should not be construed as investment advice.
The ESG Investor Insights Report is composed of the results from a series of surveys with professional investors and individual investors released between 2020 and 2021, with supporting data points from prior years. Market participants surveyed include institutional investors, fund selectors, financial professionals and individual investors. Surveys cited specifically in this piece include the following:
1 Natixis Investment Managers, Global Survey of Individual Investors conducted by CoreData Research, February-March 2019. Survey included 9,100 investors from 25 countries.
2 Natixis Investment Managers, Global Survey of Professional Fund Buyers conducted by CoreData Research in November and December 2020. Survey included 400 respondents in 23 countries.
Mirova is operated in the US through Mirova US LLC (Mirova US). Prior to April 1, 2019, Mirova operated through Ostrum US.