A recent survey of 800 investors globally, ranging from small businesses to large firms, has found that ESG remains a focus for investors for various reasons. The survey by RBC Global Asset Management revealed that most investors believe that ESG aligned portfolios perform just as well, if not better than their non-ESG-focused counterparts and that ESG is beyond just sustainability.
Of all of the investors, institutional investors, with some of the largest reported portfolios, were the most prominent advocates for ESG principles; 89% had adopted ESG into their investment choices and approaches, compared to the 72% of all investors surveyed.
Diversity within corporate boards was a high priority for over half of the institutional investors, with 56% reporting that boards should have targets for minority inclusion. In addition, 39% said that inclusion should be approached through shareholder proposals, indicating a much higher propensity for corporate engagement.
Unsurprisingly, over half of these same investors believe that engagement with companies on ESG is a more effective strategy for bringing about change than divestment.
“”Over the past five years, our data has clearly demonstrated that institutional investors are convinced of the merits of ESG adoption and are committed to incorporating ESG in their investment approach to help mitigate risk and generate long-term sustainable alpha,” said Melanie Adams, Vice President and Head of Corporate Governance and Responsible Investment at RBC Global Asset Management in a press release.
Putnam’s Foundational Approach Incorporates ESG
Putnam believes in sustainability and holds ESG practices as a core aspect of its investment approach. Its ESG-focused active sustainability managers are a fundamental part of the business and are incorporated into the rest of the asset management team, participating in meetings, helping provide guidance through research, and interacting internally and externally to align shareholder ESG values with investment practices.
The approach goes above and beyond the current standards are in the industry; Putnam engages with the companies it invests in, speaking with top-level executives and providing sustainability strategies that benefit the company and its investors.
“For Putnam, as a long-term fundamental investor, engagement with corporate management is a critical part of our fundamental research process. For reference, Putnam’s research team held over 2,000 meetings with company management in 2019. We are in regular dialogue with companies about strategy and execution, and where applicable, relevant ESG issues,” according to the Putnam website.
Putnam’s stewardship practices include reaching out to and engaging with CEOs of the companies it invests in. Last year the company sent out over 100 letters to CEOs. It also participates in proxy voting via the independent Trustees of the Putnam Funds, who are committed to advocating for strong corporate governance practices.
Putnam currently offers four different actively managed ETFs: the Putnam Focused Large Cap Growth ETF (PGRO ); the Putnam Focused Large Cap Value ETF (PVAL ); the Putnam Sustainable Future ETF (PFUT ); and the Putnam Sustainable Leaders ETF (PLDR ).
For more news, information, and strategy, visit the Big Ideas Channel.
