At Exchange: An ETF Experience 2022, V-Square Quantitative Management’s co-founder and president Mamadou-Abou Sarr told NYSE’s Judy Shaw that when it comes to environmental, social, and governance investing, investors should “own what you know and know what you own.”
Sarr explained that, while he’s “seen over the past few years a surge of ESG funds, the last few months we’ve seen a lot of them having the ESG level being removed,” which Sarr sees as “a sign that as an industry, we actually need to do a better job explaining what ESG means, being more transparent on the methodology, but also for asset managers be[ing] intentional about how they operate.”
Climate risk is another focus for the Chicago-based global asset manager. “Climate has an impact,” Sarr said. “It could be disproportionate across asset classes, but it’s important for investors to appreciate that it’s impacting allocation.”
Sarr added that, with the SEC proposing new rules in March for companies to “provide greater climate disclosure” is a step in “the right direction” and “could help the market addressing climate risk at least at an investment level.”
Sarr also noted that putting “more focus on the ‘S’ part of ESG” and “asking for social energy got governance to address social issues” is another “major trend.”
“You need to have the right governance framework,” Sarr said.
The ESG Movement
While the focus on ESG investing is “not a new movement,” Sarr admitted that “it’s interesting to see the surge and the interest” in this type of investing.
“It’s a pivotal moment for the industry,” Sarr added. “We should not lose sight about the goal of ESG. It is not a separate asset class. It’s a range of information that help us make better investment decisions.”
“Transparency and Access to Data”
According to Sarr, investors and advisors currently “want more transparency, they want greater tools to make allocation decisions, and also, they want to understand the attribution and what drives the performance of ESG funds.” So, V-Square developed a tool to “help investors decipher the field and make better investment decisions.”
“It’s all about transparency and access to data,” Sarr added.
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