“[B]ecause capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself.”
And just like that, Larry Fink, CEO of BlackRock, potentially changed everything. This quote is taken from his letter to CEOs in January, where Fink argues that climate change is the defining determinant of a company’s future success.
We believe his letter foreshadows a world where environmental, social, and governance factors are on a similar playing field as value, quality, and momentum.
Early Obstacles & An Entry Point
ESG investing is based on the idea that a company’s future profitability is based on its corporate sustainability, as measured by ESG risk factors.
We aim to explore concepts around ESG investing in this briefing, which is the first in our three-part series:
Our framework takes cues from a recent whitepaper published by the CFA Institute, “ESG Integration in the Americas: Markets, Practices, and Data.” Their main findings (in bold below) are a suitable framework for us to opine on the topic, though we have rearranged the findings to create a more sensible narrative for these purposes.
An Entry Point:
Empowering Advisors to Align Clients’ Values with their Investing Goals
Frankly, a big driver behind the launch of the Blueprint U.S. ESG Select Strategy was our frustration with all the dime-a-dozen options we see in the marketplace! Too often it seems investors have an “either or choice” in that they can either feel good about their investments by choosing an ESG strategy or they can have a better chance of achieving their investment goals vis a vis more risk-managed, non-ESG options.
Keep your eyes peeled for the next installment of our ESG series, where we will examine the drivers and barriers to adoption. In the meantime, if you’d like to learn more about how an ESG strategy can empower you to align your clients' values with their investing goals, please reach out.