The role of asset managers is paramount in integrating responsive investments. Simply put, their role is to reflect the values of an organization through a well-managed portfolio. Since that's pretty broad, there's really not a one size fits all approach in describing the ideal manager. A good starting point for assessment is on materiality. A few simple questions to ask when meeting with an ESG manager include: what environmental and social considerations are being integrated, are those factors financially material, and do they lead to a better outcome for the company and for society? Any ESG manager should be able to answer those questions.
The next step is measurability. Are the manager's objectives measurable and are outcomes reported to investors? The best way to hold anyone accountable is to measure and monitor their actions. You should also assess how active a manager is outside the investment process. Is the manager taking additional steps and engaging with company management to push them to achieve net zero emissions? Are they filing shareholder resolutions when engagement efforts become unsuccessful? These efforts create shareholder value by affecting real change in companies which further aligns investors' missions.
The most necessary aspect we look for in managers is intent. More and more strategies are marketed as ESG or impact, but that doesn't automatically mean they're intentional. Does the firm believe transitioning to renewable energy adds shareholder value over the long term, or are they just trying to capitalize in recent sustainability trends? Greenwashing can be hard to decipher unless you're in the weeds talking to these kinds of managers on a regular basis. At FEG, we meet with hundreds of managers a year and have resources focused specifically on responsive investing strategies. Our job as a consultant is to recommend intentional, materially driven, measurable investments for our clients to help serve their mission.
This report was prepared by Fund Evaluation Group, LLC (FEG), a federally registered investment adviser under the Investment Advisers Act of 1940, as amended, providing non-discretionary and discretionary investment advice to its clients on an individual basis. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser.
The information herein was obtained from various sources. FEG does not guarantee the accuracy or completeness of such information provided by third parties. The information in this report is given as of the date indicated and believed to be reliable. FEG assumes no obligation to update this information, or to advise on further developments relating to it.
Neither the information nor any opinion expressed in this report constitutes an offer, or an invitation to make an offer, to buy or sell any securities.
Any return expectations provided are not intended as, and must not be regarded as, a representation, warranty or predication that the investment will achieve any particular rate of return over any particular time period or that investors will not incur losses.
Past performance is not indicative of future results.
This report is prepared for informational purposes only. It does not address specific investment objectives, or the financial situation and the particular needs of any person who may receive this report.
Fund Evaluation Group, LLC, Form ADV Part 2A & 2B can be obtained by written request directed to: Fund Evaluation Group, LLC, 201 East Fifth Street, Suite 1600, Cincinnati, OH 45202 Attention: Compliance Department.
- Watch the next video in the series: Diversity, Equity, and Inclusion in Investments
- How to implement Responsive Investing in your portfolio
- Read the FEG Insight: Investing in Clean Energy
- Listen to the podcast: Renewing Energy Investments with Mark McCall of Lime Rock
- Learn about our responsive investing solutions