ESG | Event
ESG is a mainstream strategy. Once consid- ered a niche approach to investing reserved for those eating lentils in between protest marches and who want to avoid their sav- ings funding the development of arma- ments, today it has become a regular topic of conversation at shareholder meetings. Indeed, more than nine in every 10 asset owners and asset managers surveyed by BNP Paribas Asset Management predict that at least a quarter of their capital will be allocated to assets based on ESG factors by 2021.
The event kicked off with a presentation by Wim Van Hyfte, Candriam’s global head of responsible investments and research. He outlined Candriam’s investing process, its philosophy and how it implements ESG factors into its portfolios. As part of the asset manager’s offering, it has developed specific policies for its clients on topics such as engagement, voting policy and training.
Candriam also has a range of thematic funds, including a climate action strategy, which is based on its energy transition phi- losophy that targets a 1.5 degree scenario. “From our experience, from why to how is where conversations around ESG are head- ing more and more,” he said. “This is how we are being challenged by our clients.” When Van Hyfte became an ESG fund manager 15 years ago, it was a different story. “There were two people in the room. Now it is fully packed,” he said. ESG strategies were initially about negative selection, but in the UK it has moved onto fiduciary duty and engagement. In Europe it is about positive selection, best in class, ESG integration, thematic investing and impact investing.
“The problem with ESG is that it has always been black and white. You exclude or you don’t exclude. Well,
it doesn’t work that
way. There are 50 shades of grey too. “ESG is about allocating capital for me,”
Van Hyfte told the audience. “It doesn’t matter if you are talking about fixed income or equity – it is the way you do it. It is the principles that are set out in your invest- ment strategy.”
The major energy companies are clearly vulnerable to climate change risk and in the 2030s this is going to be real for them. Yet ESG is about social issues too with health, wellness, diabetes, sugar, obesity and plas- tics impacting consumers.
“There was a lot of stuff that was under the radar, but this stuff is now becoming real from a consumer point of view,” he added. Mandated disclosure could be a big step forward in improving ESG integration, and Van Hyfte hopes that mandated disclosure will happen before 2020, if the European Union (EU) can define what sustainable activities are. “Sustainability means many things to many people; the problem is that it means many different things to many people,” he added.
Issue 83 | April 2019 | portfolio institutional | 29
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