Forum Home Page [see Broadridge note below]

 The Shareholder ForumTM`

Fair Investor Access

See related case examples of

Dell Inc.

appraisal rights for intrinsic value realization

and

Walgreen Co.

stock buyback policies

"Fair Access" Home Page

"Fair Access" Program Reference

For graphs of specific company and related industry returns, see

Returns on Corporate Capital

For graphs of specific company voting for the past 5 years, see

Shareholder Support Rankings

 

 

 

Forum reference:

Survey of 118 global funds finds 70% have implemented ESG strategies, another 14% actively considering, but only 42% feel they have adequate tools to assess

 

For the survey report referenced below, see

 

Source: Business Insider, June 18, 2018 article


Money managers are flocking to a $23 trillion investing strategy that Morgan Stanley says is ready to take off


Joe Ciolli  Jun. 18, 2018, 12:30 PM

 

Getty Images / Chris Hondros

  • Environmental, social, and governance investing — also known as ESG — has exploded in popularity, with roughly $23 trillion being invested with at least a partial ESG mandate.

  • Morgan Stanley sees several factors combining to make ESG an even bigger investment force than it already is.


Sustainable investing is here to stay, whether money managers like it or not. And if Morgan Stanley's prognostications are correct, it's about to start making its influence felt to an unprecedented degree.

The firm published a report on the state of environmental, social, and governance investing — or ESG, as it's more commonly called — and found it to be at a tipping point. The strategy is growing at a time when investor reservations are vanishing, creating an ideal situation for growth, according to Morgan Stanley.

Money managers already have almost $23 trillion earmarked with an ESG mandate, which is roughly 25% of the entire global investment universe. Roughly $8.7 trillion of that is US money, while European investors account for another $12 trillion, Morgan Stanley data show.

As the chart below shows, 84% of the 118 assets owners surveyed by the firm are at least "actively considering" integrating ESG criteria into their investment decisions, with nearly half saying they're seeking implementation across the board. For context, the group spans public and corporate pensions, endowments, foundations, sovereign wealth entities, insurance companies, and other large asset owners worldwide.

Morgan Stanley

While the high percentage of desired adoption is a positive sign for ESG, the strategy must still contend with the perception that, by engaging in sustainable investing, traders are sacrificing potential returns in the name of a good cause. Morgan Stanley recently conducted a separate individual investor survey that found 57% of respondents believing ESG requires a "financial trade-off."

After all, as the chart below shows, proof of performance remains the top deciding factor for investors considering an ESG strategy.

Morgan Stanley

Luckily for ESG enthusiasts, the firm says this misguided idea seems to be fading.

"It appears that large institutional asset owners may be replacing this view with a more sophisticated recognition that ESG factors provide unique insights into long-term risks and opportunities that might not be captured by traditional financial factors," Morgan Stanley analysts wrote in a report.

What's more, the firm finds that the future looks bright for ESG, considering the investment behaviors of millennials. Morgan Stanley's 2017 survey of individual investors found they're more than twice as likely as other generations to consume products made by companies seen as sustainable.

With all of that established, it's clear that ESG has a bright future of growth ahead of it, especially as the notion of a value trade-off evaporates.

"Fueled by a convergence of long-term performance considerations with trends like mission alignment, regulations and stakeholder demand, interest in sustainable investing has both accelerated and evolved," the firm said. "We expect many more opportunities to open up for those managers who are able to build the products, relationships and trust that can help investors generate strong risk-adjusted returns while having a positive impact on the world."


* Copyright © 2018 Insider Inc. All rights reserved.

 

 

This Forum program is open, free of charge, to anyone concerned with investor interests in the development of marketplace standards for expanded access to information for securities valuation and shareholder voting decisions. As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

This Forum program was initiated to address issues and objectives defined by participants in the 2010 "E-Meetings" program relevant to broad public interests in marketplace practices, rather than investor decisions relating to only a single company. The Forum may therefore invite program support of several companies that can provide both expertise and examples of leadership relating to the issues being addressed.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to access@shareholderforum.com.

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.