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ESG – Impact On Role and Structure

By Laetitia Glossop

The pace of change in the investment management industry has always been fast, be it the evolution of hedge funds, the advent of derivatives or the repercussions of the credit crash of 2009. However, a convergence of circumstances in recent years has precipitated what may prove to be one of the most meaningful long-term evolutions of all: the growth of Environmental Social and Governance (ESG) considerations in investing.

In itself, sustainable/responsible investing is nothing new: the Liontrust Sustainable Investment team have worked together for over 18 years; Insight Investment was one of the first signatories to the UN Principles for Responsible Investing in 2006; Robeco first embarked on sustainable investing in the 1990s; while Friends Provident launched the first UK ethical fund in 1984.

In the meantime, numerous funds have been launched with varying emphases on aspects of ESG, particularly climate change – a trend which proliferated in 2019. In the recent past, ESG, in the broadest sense, has become a headline topic across the industry. Pressure from regulators and governments, together with changing societal awareness, has contributed to the growing demand from asset owners for investments that not only meet their financial expectations but do so in a way that aligns to their behavioural values. The historic perceived misalignment between the two aims is diminishing.

However, there has been a varied response across the asset management industry to this increasing demand for investments that both deliver a financial return and meet non-financial criteria. While researching this paper, JD Haspel engaged with over 50 CEOs, CIOs, investment and distribution professionals, asset owners, as well as consultants, to examine how ESG is viewed and approached across the investment industry.

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