BOSTON & TORONTO--(BUSINESS WIRE)--The rising importance placed on environmental, social and governance investing may be a key driver in getting more individual investors, across generations, to invest more or even start planning for retirement, suggest findings from Natixis Global Asset Management’s 2017 ESG Report.
The report surveyed 7,100 individuals from 22 countries, across three investor populations, including institutional decision makers, financial advisors, individual investors and participants in defined contribution plans in the U.S.
“Individuals clearly tell us that they want their investments to reflect their personal values. The environmental, social and ethical records of the companies included in their investment portfolios matter to investors,” said David Goodsell, executive director of the Durable Portfolio Construction Research Center at Natixis Global Asset Management. “We also see the potential to incorporate strategies that consider ESG criteria to incent younger investors to increase their participation in company-sponsored retirement plans. Eighty-four percent of Millennials say they would save more for retirement if their plan offered an ESG option. We see a real desire from Millennials to ensure that their money does social good.”
Three-quarters of global investors say it is important that they invest in companies that reflect their personal values. This opinion is held consistently across gender, generation, and wealth bands within the survey population.
The findings show a large majority of investors find investing in companies with sound environmental records (70%), companies that are seen as doing social good (71%), and companies making investments that help to fund advancements in healthcare and education (71%) important. In addition, 78% stress the importance of investing in companies that are ethically run.
Additionally, there is a gap in the sentiment between how men and women perceive ESG and its framework within their portfolios. A slightly larger percentage of women (76%) are concerned with ESG factors compared to men (72%). Overall, there is a three- to five-point difference in opinions between the sexes across all factors. Investing in ethically run companies is where respondents place the greatest emphasis, with 81% of women saying it is important, 31% of whom say it is very important.
ESG as a Risk Management Tool
Although ESG may not be as familiar to financial advisors as traditional investment strategies, the discipline is gaining more attention within the financial services industry. Forty percent of advisors globally are already using ESG seeking to mitigate governance and social risks. Additionally, institutions surveyed anticipate a greater role for ESG, with six in ten predicting that it will become standard practice for their organizations within the next five years.
In terms of portfolio management, 55% say there is alpha 5 to be found in ESG, while 57% say ESG can help mitigate headline risks.
“The fundamentals of a company are only part of the story. Understanding how the board governs itself, its business, the environment in which it works and its employees live, as well as how it treats people are equally critical to discovering good, long-term investments,” said Jens Peers, Chief Investment Officer at Mirova. “ESG factors are not to be confused with negative filters, known historically as SRI, or socially responsible investments.”
Still, the investment community faces great challenges when it comes to successful implementation of ESG measures. Reporting on both financial and non-financial performance ranks as a top hurdle for institutions, while advisors are challenged by the lack of a sufficient performance track record.
However, the increasing number of fund ratings bureaus and research houses introducing tools to address monitoring and measurement of ESG factors is helping to reduce the difficulty of performance reporting.
“There are real world changes, like population growth, urbanization, and resource depletion, that may have an immeasurable effect on equity markets and transform companies as we know them today. These trends may present investors with potential opportunities, as well as connect them to their portfolio, in ways traditional investments do not. If it’s possible that these options will entice investors to save more because of the ESG elements in a portfolio, then ESG solutions are not only offering a more complete solution to investors, but also playing a role in the evolution of the world as we will know it,” continued Mr. Peers.
These findings are published in a new whitepaper, “Mind Shift: Getting Past the Screen of Responsible Investing.” For more information, visit http://durableportfolios.com/global/understanding-investors/environmental-social-governance-survey-findings
The views and opinions expressed may change based on market and other conditions.
ESG investing focuses on investments in companies that relate to certain sustainable development themes and demonstrate adherence to environmental, social and governance (ESG) practices, therefore the universe of investments may be reduced. A security may be sold when it could be disadvantageous to do so and opportunities may be missed in certain companies, industries, sectors or countries. This could have a negative impact on performance depending on whether such investments are in or out of favor.
Mirova, a subsidiary of Natixis Asset Management, offers a global responsible investing approach involving Equities, Fixed-Income, General and Renewable Energy Infrastructure, Impact Investing, and Voting and Engagement. It has $6.8 billion in assets under management (as of 12/31/16) and $44 billion in Voting and Engagement (as of 12/31/15). Its team of circa 60 multidisciplinary experts includes specialists in thematic investment management, engineers, financial and environmental, social and governance analysts, project financing specialists and experts in solidarity finance.
About Natixis Asset Management U.S., LLC and Mirova
Natixis AM U.S. provides access to investment solutions that benefit from the extensive resources of a leading European asset management group. Natixis AM U.S. launched in 2014, is a U.S.-based investment adviser, majority-owned by Natixis Asset Management and minority-owned by Mirova with $423 million in assets under management (as of 12/31/16). Natixis AM U.S. utilizes the expertise of Mirova, which is operated in the U.S. through Natixis AM U.S.
About Natixis Global Asset Management
Natixis Global Asset Management serves thoughtful investment professionals worldwide with more insightful ways to invest. Through our Durable Portfolio Construction® approach, we focus on risk to help them construct more strategic portfolios that seek to endure today’s unpredictable markets. We draw from deep investor and industry insights and partner closely with our clients to put objective data behind the discussion.
Natixis Global Asset Management is ranked among the world’s largest asset management firms.1 Uniting over 20 specialized investment managers globally ($895.6 billion AUM2), we bring a diverse range of solutions to every strategic opportunity. From insight to action, Natixis Global Asset Management helps our clients better serve their own with more durable portfolios.
Headquartered in Paris and Boston, Natixis Global Asset Management, S.A. is part of Natixis. Listed on the Paris Stock Exchange, Natixis is a subsidiary of BPCE, the second-largest banking group in France. Natixis Global Asset
Management, S.A.’s affiliated investment management firms and distribution and service groups include Active Index Advisors;3 AEW Capital Management; AEW Europe; AlphaSimplex Group; Axeltis; Darius Capital Partners; DNCA Investments;4 Dorval Finance;5 Emerise;6 Gateway Investment Advisers; H2O Asset Management;5 Harris Associates; IDFC Asset Management Company; Loomis, Sayles & Company; Managed Portfolio Advisors;3 McDonnell Investment Management; Mirova;5,7 Natixis Asset Management; Ossiam; Seeyond;7 Vaughan Nelson Investment Management; Vega Investment Managers; and Natixis Global Asset Management Private Equity, which includes Seventure Partners, Naxicap Partners, Alliance Entreprendre, Euro Private Equity, Caspian Private Equity and Eagle Asia Partners. Not all offerings available in all jurisdictions. For additional information, please visit the company’s website at ngam.natixis.com | LinkedIn: linkedin.com/company/natixis-global-asset-management
In Canada: This material is provided by NGAM Canada LP / Natixis Global Asset Management Canada.
1 Natixis Global Asset Management, Global Survey of
Individual Investors conducted in May 2016. The survey included 7,100
2 Natixis Global Asset Management, DC Plan Participant Survey conducted in November 2016. The survey included 951 US participants
3 Natixis Global Asset Management, Global Survey of Institutional Investors conducted in March 2017. The survey included 500 participants globally.
4 Natixis Global Asset Management, Global Survey of Financial Advisers conducted in September 2016. The survey included 2,550 participants globally.
5 A measure of the difference between a portfolio's actual returns and its expected performance, given its level of systematic market risk. A positive alpha indicates outperformance and negative alpha indicates underperformance relative to the portfolio's level of systematic risk.
1 Cerulli Quantitative Update: Global Markets 2016
ranked Natixis Global Asset Management, S.A. as the 16th
largest asset manager in the world based on assets under management
($870.3 billion) as of December 31, 2015.
2 Net asset value as of March 31, 2017. Assets under management (AUM) may include assets for which non-regulatory AUM services are provided. Non-regulatory AUM includes assets which do not fall within the SEC’s definition of ‘regulatory AUM’ in Form ADV, Part 1.
3 A division of NGAM Advisors, L.P.
4 A brand of DNCA Finance.
5 A subsidiary of Natixis Asset Management.
6 A brand of Natixis Asset Management and Natixis Asset Management Asia Limited, based in Singapore and Paris.
7 Operated in the U.S. through Natixis Asset Management U.S., LLC.