While COVID-19 has slowed the economy in many ways, it has served to stimulate one rapidly growing corner of the asset management world: ESG investing. During Q2 2020, when most segments of the market were vacillating between uncertain and unimpressive, flows into sustainable funds hit an all-time high. Assets following ESG principles are expected to soon rise to 44% of global AUM, reaching $45 trillion by the end of 2020.
And that positive growth is only expected to continue. J.P. Morgan’s study on the impact of COVID-19 on ESG investing found that investors believe the pandemic will have a positive impact on the future of responsible investing.
Asset management firms are largely prepared for this socially responsible shift in focus. Most companies already have a dedicated team solely devoted to guiding their ESG efforts.
In addition, many asset managers have ramped up their communications around ESG and social issues in general. Here are four that are leading the pack in highlighting their commitment to sustainability.
BlackRock
In January of this year, BlackRock CEO Larry Fink penned an open letter to CEOs declaring that ESG represented a “fundamental reshaping of finance” and warning them that BlackRock will be “increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures and the business practices and plans underlying them.”
Nine months later, BlackRock has not only made good on their promise but also ramped up their messaging on ESG.
WHAT ASSET MANAGERS ARE DOING WELL: BLACKROCK
Lead the way
When the world’s largest asset manager speaks, the world listens. In 2018, Larry Fink said BlackRock would pave the way in ESG, and they’ve been at the forefront ever since. Rather than react to the latest developments, BlackRock frequently publishes forecasts of issues it sees on the horizon.
Practice what they preach
BlackRock’s ESG Integration page explains why ESG isn’t just something they talk about; it’s also a core philosophy of everything they do.
State Street
State Street has made a name for itself as a socially minded brand ever since Fearless Girl in 2017, so it’s no surprise that they would champion ESG investing.
To commemorate the 50th anniversary of Earth Day, State Street released a video this year explaining what ESG is and why they believe it is so important.
The video calls to task asset managers who view ESG as “just another vertical,” rather than integrate it into everything they do.
But State Street isn’t just expounding on the virtues of ESG. In late August, they released an open letter to corporate boards asking them to make racial and ethnic diversity disclosures available to shareholders. The letter then goes a step further, declaring that State Street is “prepared to use our proxy voting authority to hold companies accountable for meeting our expectations.”
WHAT ASSET MANAGERS ARE DOING WELL: STATE STREET
Take a “no-compromises” approach that appeals to their target audience
Investors are often wary of corporate pledges to social issues, and State Street is preempting such criticism by making their own efforts plain and encouraging others to do the same, as in the open letter above.
Put their money where their mouth is
The high production value (and the dollars behind it) of State Street’s ESG video says a lot about their commitment to sustainability as a pillar of their brand.
Putnam
This year saw the release of Putnam’s second annual Impact Report, an in-depth review of the Putnam Sustainable Leaders Fund and the Putnam Sustainable Future Fund.
Asset managers releasing reports on funds is nothing new. What stands out about the Impact Report is how much deeper it goes than simply showing performance numbers.
WHAT ASSET MANAGERS ARE DOING WELL: PUTNAM
Provide transparency
Putnam compares their funds against others in multiple areas, including “Number of Women on Boards of Directors” and “Carbon Intensity,” even when they’re not at the top of the list.
Go deeper
The report features multiple callouts with information explaining the “why” behind causes at the core of their Sustainable Funds.
Schroders
Schroders’ blog features frequent content on ESG investing. Throughout 2020, each month has featured between four and eight pieces under the broader “sustainability” topic.
While some pieces are relatively short, the majority of them exceed 1,000 words and often highlight Schroders’ ongoing research on the subject.
WHAT ASSET MANAGERS ARE DOING WELL: SCHRODERS
Make the most of an existing channel
Schroders’ commitment to content is clear to anyone who visits their website. By building ESG as a core pillar of their content calendar, they are able to fold it into their preexisting content marketing strategy. Schroders even runs Google search ads for the term “esg investing” that point visitors directly to their blog index for the term “sustainability.”
Look at it from all angles
By returning to the topic of ESG frequently, Schroders hits a variety of perspectives that fall under the large umbrella that is sustainability. Rather than putting up a couple of landing pages, videos, or even a longer study on the overarching subject, they publish blog articles that allow them to go in-depth on a variety of facets – and keep up with the latest trends in this rapidly evolving space.
