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ESG can help deliver “what everyone wants” says Legg Mason CFO

US titan says 14% of its total AUM now devoted to responsible investment

Environmental, social and governance (ESG) principles can help deliver “what everyone wants” – strong, risk-adjusted performance over the long term – says Legg Mason’s Chief Financial Officer Pete Nachtwey.

The comments come as the venerable Baltimore-based investment giant has revealed that 14% of the total assets of its various affiliate firms are now invested in ESG/socially responsible investment strategies – or just over $80bn.
“There is no doubt that more investors each day are coming to believe that focusing on ESG principles can help deliver what everyone wants: strong, risk-adjusted performance over the long term,” Nachtwey said, writing in the firm’s new CSR report.
Nachtwey, named during the year as ‘Executive Sponsor’ of the New York-listed company’s Environmental Sustainability Council, said this development was being led by public pension funds – with the millennial generation right behind them. He joined the firm from private equity giant Carlyle in 2010.

He added the firm is working to develop a “more unified reporting strategy” to collect CSR data across the firm and its affiliates. The report also reveals it is working to introduce an environmental sustainability policy this year.Legg Mason, founded in 1899, operates via an affiliate structure comprising firms such as alternatives specialist Permal, equity firm ClearBridge and value investor Brandywine. Clearbridge, for example, launched a Sustainability Leaders Fund in April this year, investing in equities that meet specific ESG criteria. While Legg Mason itself is not a signatory to the Principles for Responsible Investment, ClearBridge, Martin Currie and Permal are.

The share of ESG assets under management has been steadily growing at Legg Mason over the past few years, from 13% in 2014 and 9.9% in 2013.

One of the world’s largest asset management firms, Legg Mason says it is committed to the ESG space and that it conducted its first Corporate Social Responsibility (CSR) materiality analysis during the year.

It defines materiality as the ESG topics that will have the potential of impacting a company now and in the future, and reflect stakeholder priorities in terms of the impact the company has on the world. The company also has a “NO Chalk” approach to ethics, stressing that employees never go near the “chalk lines that mark unethical territory”. Link