Responsible Investing

With human rights regulations expanding, investors need a broader approach to assessing risk and opportunity.

Whatever approach an investor chooses, we believe it’s important to manage a climate-related portfolio with the same research rigor and risk management as any other active equity strategy. That means ensuring that the portfolio has adequate diversification.

As a global disruptor, climate change remains one of a handful of mega-forces likely to permanently change how the world lives, works and consumes—all directly affecting countries, assets and companies on many levels.

Research—our own included—indicates that the age diversity of a company’s board of directors may correlate with operational performance and shareholder returns, making a strong case for multigenerational boards.

The US Inflation Reduction Act has boosted investment opportunities in renewable energy. Could the potential for new leadership in Washington change that? We don’t think so.

Responsible investing has been on a pendulum. Enthusiasm for incorporating ESG issues in investment strategies has given way to a reality check in recent years.

China has quickly risen to dominate the global battery electric-vehicle (BEV) industry, both as a manufacturer and as a market. Its dominance looks set to continue, but the industry—in China and elsewhere—faces headwinds.

Investors need to integrate financially material ESG risks and opportunities into their portfolios. But that’s no easy matter. Company ESG data, when it exists, can be hard to find and subjective.

Companies emitting high levels of GHG face complex challenges as they prepare for a low-carbon world. Our experience shows how constructive engagement can help support business strategies and investors’ returns.

After a rapid ascent, issuance of ESG-labeled bonds has fallen back recently, even as we’ve observed that the overall quality of the market has improved. That’s an intriguing combination—with an explanation.