Understanding ESG Investing: A Path to Sustainable Future

 
A
n
 
I
n
t
r
o
d
u
c
t
i
o
n
 
t
o
 
E
S
G
 
I
n
v
e
s
t
i
n
g
 
Mike Seagrove & Calum Butt
1
 
INTRODUCTION
2
 
Introduction to ESG Investing
 
The world is facing many real challenges, important and in some cases urgent.
 
3
 
The World Needs to Change
 
Consumer Purchasing
 
Avoid companies with poor reputations
Favour good companies
Animal testing choices
 
Housing
 
Better insulation
Appliance ratings
Recycling
 
Sustainable Investing
 
Favour good companies
Avoid worse companies
Underweight ‘less good’ companies
 
Travel
 
Carbon off-set for flights
E-cars and fuel efficiency
Methods of travel
 
Energy Supply
 
Sourcing greener energy
Solar panels
Smart meters
 
Food & Agriculture
 
Better animal welfare
Food miles
Avoiding deforestation (palm oil).
Being Part
of the
Solution
4
 
The World Needs to Change
Sustainability – Balancing the claims of the present, against the claims of the
future.
5
The World Needs to Change
 
Source: United Nations
 
Making the world a better place
Defining a more balanced use of natural resources
Tackling climate change and caring for the environment
Building a fairer society
Driving better corporate governance
ESG Investing can assist with all of these factors
 
Environmental
Biodiversity loss
Greenhouse gas emissions
Energy efficiency
Renewable energy
Resource depletion
Ocean acidification
Ozone depletion
 
Social
Mass migration
Wealth distribution
Access to healthcare
Workplace health and safety
Diversity
Employment rights, child
labour and slavery
Controversial weapons such
as cluster bombs
 
Governance
Executive compensation
Bribery and corruption
Independent directors
Ethics in business
Transparent disclosure of
ESG criteria
Whistle-blowing policies
Implications of business
strategy on social and
sustainability issues
6
 
What is ESG Investing?
 
ESG investing can be broadly defined as ‘integrating Environmental, Social and
Governance factors of companies into the fundamental investment process’
 
7
 
What is ESG Investing?
 
How is this Integrated?
Core portfolio analysis to include ESG credentials
ESG ratings form part of decision
Ratings Agencies (e.g. MSCI & Sustainaltics)
Evaluation of ESG can be difficult – lack of data
8
 
Thematic Portfolio
 
Impact Portfolio
 
Systematic Portfolio
 
Often private markets
Direct involvement
Return of capital +
Concentration risks
Liquidity and exit risk
Impact closely measured
 
Seeking capital market returns
Public and private markets
Themes e.g. renewable energy
farms
Company size tends to be smaller
More highly concentrated
Impact implied in theme choice
 
Seeking broad capital market
returns
From public markets
Risk and return similar to
traditional portfolio
Remain broadly diversified
Tilt toward better ESG credentials
Impact harder to quantify
 
Types of ESG Investment
 
Low cost – Passive options
available
 
Well diversified portfolios to
reduce risk
 
Suitable for large proportion of
investors
 
Steps in the right direction
 
Retain Sector Weightings
 
Capture broad market returns
9
 
Our Preferred Approach to ESG Investment
Systematic
ESG
Portfolio
 
Systematic ESG Portfolios in practice – Improving the ESG Credentials of a portfolio.
10
Our Preferred Approach to ESG Investment
 
Key Notes
Moves from market cap to ESG Rating
Oil & Gas – Not excluded  - Why?
Production of ‘Cluster Munitions’ excluded
Building a fairer society
Strong ESG Credentials – Better long term prospects
60%
100%
The AG ESG
Model
Portfolio
range
 
AG ESG Balanced Portfolio
 
AG ESG Moderately
Adventurous Portfolio
 
AG ESG Adventurous Portfolio
 
AG ESG Cautious Portfolio
 
AG ESG Moderately Cautious
Portfolio
11
 
Our Preferred Approach to ESG Investment
40%
20%
80%
 
The Albert Goodman ESG Model Portfolio Performance
12
Our Preferred Approach to ESG Investment
*
Returns are net of fund costs
**Historic returns from 31/03/2021
P
a
s
t
 
p
e
r
f
o
r
m
a
n
c
e
 
i
s
 
n
o
t
 
i
n
d
i
c
a
t
i
v
e
 
o
f
 
f
u
t
u
r
e
 
r
e
s
u
l
t
s
 
a
n
d
 
n
o
r
e
p
r
e
s
e
n
t
a
t
i
o
n
 
i
s
 
m
a
d
e
 
t
h
a
t
 
t
h
e
 
s
t
a
t
e
d
 
r
e
s
u
l
t
s
 
w
i
l
l
 
b
e
r
e
p
l
i
c
a
t
e
d
.
Long term returns in line with
broad global market
Higher ESG credentials – better
longer term prospects
Positive impact on the world
1 Year returns – post pandemic
recovery
 
Comparison against non ESG investment
13
Our Preferred Approach to ESG Investment
*
Returns are net of fund costs
**Historic returns from 31/03/2021
P
a
s
t
 
p
e
r
f
o
r
m
a
n
c
e
 
i
s
 
n
o
t
 
i
n
d
i
c
a
t
i
v
e
 
o
f
 
f
u
t
u
r
e
 
r
e
s
u
l
t
s
 
a
n
d
 
n
o
r
e
p
r
e
s
e
n
t
a
t
i
o
n
 
i
s
 
m
a
d
e
 
t
h
a
t
 
t
h
e
 
s
t
a
t
e
d
 
r
e
s
u
l
t
s
 
w
i
l
l
 
b
e
r
e
p
l
i
c
a
t
e
d
.
Returns Comparison
Risk Comparison
 
1
2
 
Use a sensible ESG approach where available
Maintain portfolio risk
Better, more robust ESG Metrics
A more consistent approach
Great impact understanding
3
 
Wider product choices
Better index construction
Full asset class coverage
4
14
Our Preferred Approach to ESG Investment
The destination is worth it………….
A better World
 
15
 
Important Notes
 
This is a purely educational document to discuss some general investment related issues. It does
not in any way constitute investment advice or arranging investments. It is for information
purposes only; any information contained within them is the opinion of the authors, which can
change without notice. All information is based on sources that the firm believes to be reliable. No
responsibility can be accepted for actions taken as a result of reading this document.
 
P
a
s
t
 
p
e
r
f
o
r
m
a
n
c
e
 
i
s
 
n
o
t
 
i
n
d
i
c
a
t
i
v
e
 
o
f
 
f
u
t
u
r
e
 
r
e
s
u
l
t
s
 
a
n
d
 
n
o
 
r
e
p
r
e
s
e
n
t
a
t
i
o
n
 
i
s
 
m
a
d
e
 
t
h
a
t
 
t
h
e
 
s
t
a
t
e
d
r
e
s
u
l
t
s
 
w
i
l
l
 
b
e
 
r
e
p
l
i
c
a
t
e
d
.
 
Errors and omissions excepted.
 
Thank
You
 
Calum Butt
Consultant
calum.butt@albertgoodman.co.uk
 
Mike Seagrove
Chartered Financial Planner
michael.seagrove@albertgoodman.co.uk
Slide Note
Embed
Share

ESG investing, which focuses on Environmental, Social, and Governance factors, is crucial for addressing global challenges and promoting sustainability. By considering impact portfolios, thematic portfolios, and systematic approaches, investors can be part of the solution by supporting companies that prioritize sustainability practices. The world needs to change, and ESG investing offers a way to drive positive environmental and social impact while ensuring good governance practices. From energy supply to food and agriculture, ESG investing encourages responsible choices that benefit society and the planet. Embracing ESG criteria can lead to a more balanced use of natural resources, tackle climate change, and foster fairer corporate governance. ESG investing aligns with the United Nations' goals and can help create a better world for current and future generations.


Uploaded on Jul 20, 2024 | 0 Views


Download Presentation

Please find below an Image/Link to download the presentation.

The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. Download presentation by click this link. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.

E N D

Presentation Transcript


  1. 1 An Introduction to ESG Investing An Introduction to ESG Investing Mike Seagrove & Calum Butt

  2. Introduction to ESG Investing The World Needs to Change Being part of the solution Sustainability What is ESG Investing? Types of ESG Investment? Environmental Social Governance INTRODUCTION Impact Portfolio Thematic Portfolio Systematic Portfolio AG Approach to ESG Investment Systematic ESG Portfolio Overweight Best in Class Performance The destination is worth it 2

  3. The World Needs to Change The world is facing many real challenges, important and in some cases urgent. 3

  4. The World Needs to Change 4 Energy Supply Housing Sourcing greener energy Solar panels Smart meters Better insulation Appliance ratings Recycling Being Part of the Solution Travel Consumer Purchasing Carbon off-set for flights E-cars and fuel efficiency Methods of travel Avoid companies with poor reputations Favour good companies Animal testing choices Food & Agriculture Sustainable Investing Better animal welfare Food miles Avoiding deforestation (palm oil). Favour good companies Avoid worse companies Underweight less good companies 4

  5. The World Needs to Change Sustainability Balancing the claims of the present, against the claims of the future. Making the world a better place Defining a more balanced use of natural resources Tackling climate change and caring for the environment Building a fairer society Driving better corporate governance ESG Investing can assist with all of these factors Source: United Nations 5

  6. What is ESG Investing? Social Mass migration Wealth distribution Access to healthcare Workplace health and safety Diversity Employment rights, child labour and slavery Controversial weapons such as cluster bombs Governance Executive compensation Bribery and corruption Independent directors Ethics in business Transparent disclosure of ESG criteria Whistle-blowing policies Implications of business strategy on social and sustainability issues Environmental Biodiversity loss Greenhouse gas emissions Energy efficiency Renewable energy Resource depletion Ocean acidification Ozone depletion 6

  7. What is ESG Investing? ESG investing can be broadly defined as integrating Environmental, Social and Governance factors of companies into the fundamental investment process How is this Integrated? Core portfolio analysis to include ESG credentials ESG ratings form part of decision Ratings Agencies (e.g. MSCI & Sustainaltics) Evaluation of ESG can be difficult lack of data 7

  8. Types of ESG Investment 8 Impact Portfolio Thematic Portfolio Systematic Portfolio Seeking broad capital market returns From public markets Risk and return similar to traditional portfolio Remain broadly diversified Tilt toward better ESG credentials Impact harder to quantify Often private markets Direct involvement Return of capital + Concentration risks Liquidity and exit risk Impact closely measured Seeking capital market returns Public and private markets Themes e.g. renewable energy farms Company size tends to be smaller More highly concentrated Impact implied in theme choice

  9. Our Preferred Approach to ESG Investment Low cost Passive options available Capture broad market returns Systematic ESG Portfolio Well diversified portfolios to reduce risk Retain Sector Weightings Steps in the right direction Suitable for large proportion of investors 9

  10. Our Preferred Approach to ESG Investment Systematic ESG Portfolios in practice Improving the ESG Credentials of a portfolio. Key Notes Moves from market cap to ESG Rating Oil & Gas Not excluded - Why? Production of Cluster Munitions excluded Building a fairer society Strong ESG Credentials Better long term prospects 10

  11. Our Preferred Approach to ESG Investment AG ESG Balanced Portfolio 60% AG ESG Moderately Adventurous Portfolio 40% AG ESG Moderately Cautious 80% Portfolio The AG ESG Model Portfolio range AG ESG Cautious Portfolio AG ESG Adventurous Portfolio 20% 100% 11

  12. Our Preferred Approach to ESG Investment The Albert Goodman ESG Model Portfolio Performance Long term returns in line with broad global market Higher ESG credentials better longer term prospects Positive impact on the world *Returns are net of fund costs **Historic returns from 31/03/2021 1 Year returns post pandemic recovery Past performance is not indicative of future results and no Past performance is not indicative of future results and no representation is made that the stated results will be representation is made that the stated results will be replicated. replicated. 12

  13. Our Preferred Approach to ESG Investment Comparison against non ESG investment Returns Comparison Risk Comparison *Returns are net of fund costs **Historic returns from 31/03/2021 Past performance is not indicative of future results and no Past performance is not indicative of future results and no representation is made that the stated results will be representation is made that the stated results will be replicated. replicated. 13

  14. Our Preferred Approach to ESG Investment The destination is worth it . 1 2 Use a sensible ESG approach where available Maintain portfolio risk Better, more robust ESG Metrics A more consistent approach Great impact understanding 3 Wider product choices Better index construction Full asset class coverage 4 A better World 14

  15. Important Notes This is a purely educational document to discuss some general investment related issues. It does not in any way constitute investment advice or arranging investments. It is for information purposes only; any information contained within them is the opinion of the authors, which can change without notice. All information is based on sources that the firm believes to be reliable. No responsibility can be accepted for actions taken as a result of reading this document. Past performance is not indicative of future results and no representation is made that the stated Past performance is not indicative of future results and no representation is made that the stated results will be replicated. results will be replicated. Errors and omissions excepted. 15

  16. Thank You Mike Seagrove Calum Butt Chartered Financial Planner Consultant michael.seagrove@albertgoodman.co.uk calum.butt@albertgoodman.co.uk

Related


More Related Content

giItT1WQy@!-/#giItT1WQy@!-/#giItT1WQy@!-/#giItT1WQy@!-/#giItT1WQy@!-/#giItT1WQy@!-/#giItT1WQy@!-/#