Nathalia Barazal
“You need to own the subject, to integrate it, not just have an ESG team.” Nathalia Barazal, Lombard Odier IM
Portfolio Institutional: What does ESG mean to asset owners? Mark Thompson: Managing environmental, social and governance risks is consistent with our fiduciary responsibility. So it is all about value and not values. As a result of that, for the last eight or so years we have been incorporating the management of ESG risks into our mainstream investment process. Patrick O’Hara: It is an integration process. It’s about making better informed investment decisions, which hopefully will lead to better outcomes. This is helping fund managers to take advantage of opportunities associated with, for example, the tran- sition to a lower carbon economy and managing the risks associated with that. Faith Ward: We see ESG as a series of risks that might present an issue to investment returns. That could include political risk, which is why sometimes the coining of ESG can be somewhat limiting. You want to know if there are any risks that fall outside of traditional financial analysis that might have an impact on investment returns. Being a new pool has massive advantages in terms of having a blank sheet of paper from which to work. We don’t have the legacy issue of having to change manager behaviour because we can go out and clearly say what we want from the outset.
PI: Are asset managers seeing a growing interest in ESG from their clients? Ominder Dhillon: Yes. About 15% of the tender documents we received three or four years ago had a dedicated section on ESG; that number is now approaching 60%.
6 May–June 2019 portfolio institutional roundtable: ESG
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