If you weren’t aware of ESG investing before, chances are, you started hearing more about it after the onset of COVID-19.
In many ways, the pandemic catapulted ESG investing into the mainstream. A poll of 50 global institutions completed by JP Morgan (representing nearly $13 trillion in assets) found that 71% of respondents believe that a high impact event, like COVID-19, would increase global awareness for ESG.
ESG funds have also performed admirably in the wake of the pandemic. Research from MorningStar states that 25 of 26 ESG equity index funds that author John Hale followed in 2020 beat index funds tracking the most common traditional benchmarks in their categories.
Although ESG investing has grown in popularity, for many, the question still remains: What is ESG Investing?
There tends to be a number of misconceptions about ESG Investing. To debunk some of these myths, we invited Jeff Chan, CI Global Asset Management's Director of ESG, to join us on this latest episode of the Wealth Wisdom Podcast. Jeff was incredibly thoughtful in his explanations related to ESG, touching on a number of topics, including...
- The impacts of ESG investing
- Difference between ethical and ESG investing
- How CI works with other companies to improve their ESG
You can listen to the podcast through these popular avenues.
Here are some highlights from the latest episode.
Why ESG isn’t just a fad
I’m sure you can guess what CI’s Director of ESG Investing would say about this, but his argument was a succinct one.
He lists three reasons in the clip below as to why ESG isn’t just a flash in the pan.
What he goes on to talk about after this clip is how his mom recently had a tornado creep relatively close to her home in Richmond Hill, Ontario.
In Jeff’s words, his mom told him, “this climate change thing you’ve been talking to us about for years is actually real.”
We’ve certainly seen the impacts of that this summer, with record-breaking heat waves and forest fires devastating our province.
Aside from the environmental impact, Michael Scanlon, a managing director and head of the sustainability practice at Silver Leaf Partners in New York, recently stated that while ESG used to be a standing for “greenness,” the post COVID-world has shifted the focus to “the wellness of people, the employer-employee relationship, all added to those previous environmental and diversity issues.”
The difference between ethical investing and ESG
This is one of the “myths” that Jeff wanted to touch on in this episode.
Ethical investing is the practice of excluding companies in your portfolio that go against your beliefs. ESG’s focus isn’t on exclusion, but rather helping all companies improve beyond their financial statements.
Jeff has more in this clip here.
Why ESG investments could outperform over the long-term
There’s another common theory that when you invest in an ESG fund or company, you’re giving up a higher return.
Not only does Jeff try and dispel that theory on the podcast, but he makes an argument as to why ESG investments could outperform their benchmark long-term.
How do ESG conversations work with publicly traded companies?
Figuring out how a company is working to improve their ESG begins with a conversation.
It’s no different for companies like CI, where portfolio managers and Directors like Jeff will talk to these companies to figure out what their stance is on ESG, while letting them know what they’d like to see them do differently.
For many, it’s too easy just to look at a company and think about the stock price, or the financials. However, it’s conversations like the ones Jeff is involved in that can really help drive change.
Jeff talks more about his experience in talking to companies about their ESG in this clip here.
What’s Next?
We’ve had a number of great guests join us in our first year here on the Wealth Wisdom Podcast. However, our most popular episode so far featured none other than my partner at Sana Family Office, Josh Dyck (Wealth Advisor, CFP®, BA).
On the next episode, Josh and I will discuss the five key stress points that people who are referred to us tend to face.
If you have any questions ESG investing, or comments about the stress points that you face when dealing with your financial picture, please don’t hesitate to reach out.
Until next time,
Assante Sana
John Lawson (Senior Wealth Advisor, CFP®, CIM, CEPA, FEA)
SANA FAMILY OFFICE | ASSANTE CAPITAL MANAGEMENT LTD.
