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Matthias Knab: Jade Huang, Portfolio Manager, Calvert Research and Management, writes on Harvest Exchange:
Environmental, social and governance (ESG) investing is one of the leading trends in asset management. In 2016, more than $8.5 trillion was invested with consideration of responsible investment criteria in the U.S. alone, a 33% increase since 2014, according to The Forum for Sustainable and Responsible Investment.
There are several factors driving this growth. First, more individual investors are simply interested in building portfolios that line up with their values. They are finding they don't have to sacrifice performance to do so.
In fact, as sustainability issues like climate change and human rights increasingly impact sectors across the economy, investors are discovering that the consideration of ESG in company analysis can be alpha-generating signals that may help long-term investment performance.
Also, large institutional investors are increasingly using ESG in their investment process as a way to identify high-quality companies with strong management teams. Often, management teams of companies with strong proactive sustainability profiles also have a track record of being able to better manage risk, adapt to changes, and take advantage of opportunities over the long term.
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