ESG Managers Say Pandemic Is a Stress Test That Proves Their Point - Hedge Fund Alpha (formerly ValueWalk Premium)

ESG Managers Say Pandemic Is a Stress Test That Proves Their Point

Fund managers that were touting the benefits of ESG investing before the coronavirus outbreak say the pandemic has only strengthened their convictions and the performance of sustainable portfolios should vindicate their strategy.

Q1 2020 hedge fund letters, conferences and more


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DWS and Insight Investment, which respectively oversee $834 billion and $820 billion of assets, are among the firms that say they’re not slowing their efforts to put environmental, social and governance issues at the core of their businesses even as the coronavirus outbreak causes untold economic damage. Allianz Global Investors, with $612 billion of assets under management, is doing a deep analysis to measure if ESG investments truly outperform.

Considering ESG issues alongside regular financial metrics when investing and lending had started to become standard practice in the finance industry before the global pandemic roiled markets. The panic selling that started in February is providing a test for investors’ commitment to environmental and social concerns.

“If our conviction is that ESG is important, then nothing should stand in the way,” said Joshua Kendall, senior ESG analyst at Insight in London. “If it’s not to be just a flash in the pan, then it doesn’t seem sensible to stop because of the virus.”

Insight, which is part of Bank of New York Mellon Corp., is ignoring advice from the Principles for Responsible Investment, the biggest network of responsible investment firms, of which it is a member. PRI says shareholders should now focus their engagements with companies on how they are responding to coronavirus.

Kendall said it would be a mistake to put everything on hold except Covid-19 as companies still need to hear from their investors on other long-term issues.

Insight encouraged a large emerging markets oil and gas company last month to set environmental objectives in advance of a possible sale of a so-called transition bond, Kendall said. Transition bonds are debt securities that finance projects aimed at helping the seller switch to a cleaner way of doing business. Insight also isn’t making changes to the objectives of its responsible investment team.

Read the full article by Alastair Marsh, Advisor Perspectives

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