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Alternative Market Briefing

Investor skepticism about ESG can create a teachable moment for managers

Tuesday, February 12, 2019

Bailey McCann, Opalesque New York:

Many market prognosticators have said ESG will be the future of investing. Millennials are increasingly putting pressure on institutions and companies to do better and build with sustainability in mind. Yet, skepticism remains about whether ESG strategies will truly outperform over time. Delegates at the inaugural Opalesque ESG Roundtable say that when investors hesitate on ESG, it can be a teaching moment.

"There is definitely pushback on ESG and I think that will persist for some time," said Piet Klop, Senior Advisor Responsible Investment at PGGM Investments. "We are looking at externalities which by definition may have value but don't have a price yet." For Klop and his team, the issue isn't necessarily pure outperformance but a way of investing with purpose. He adds that creating portfolios with a purpose behind them is attractive to investors and to new hires on the investment team that are often younger and see sustainability as a core issue. "It a way to win in the talent war," Klop said.

Investment firms should also view pushback as an opportunity to correct old ideas about what ESG investing means. Marisol Hernandez, Senior Manager for Alternative Investments at Principles for Responsible Investment (UN PRI) says that pushback can be a teaching moment. "One of the big misconceptions is that ESG restricts the universe of investable companies and that reduces returns," she ex......................

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