Goldman Sachs Asset Management has said it reckons environmental, social and governance (ESG) investing has now become mainstream – and that awareness of ESG factors is a minimum requirement.
GSAM recently named Hugh Lawson to lead its ESG efforts globally and the executive, who will continue as the global head of Institutional Client Strategy at GSAM, has discussed the firm’s stance on ESG in a podcast on Goldman’s website titled “The New Bottom Line.”
It follows GSAM’s acquisition last week of impact investment firm Imprint Capital Advisors, and Lawson said: “We think ESG investing has gone, in essence, mainstream and that most investments going forward will need an awareness of ESG factors at a minimum and then at a more extreme sense people will be deploying capital there.”
The comments come as Calvert Investment Management, the US sustainable investment specialist with more than $13bn under management, has released a study in which it finds “empirical evidence” that ESG factors can enhance risk-adjusted investment performance in a portfolio management context.
The 24-page paper, by Calvert’s CIO Natalie Trunow and Assistant Portfolio Manager Joshua Linder, is called Perspectives on ESG Integration in Equity Investing. They use historical analysis over various time periods from June 2000 to December 2014 to evaluate different methods for introducing ESG factors into the investment process in what is claimed to be among the firstanalyses to demonstrate the positive material impact of ESG factors in long-term equity performance.
In his remarks, Goldman’s Lawson also discussed the high profile decarbonisation efforts of the Rockefeller Brothers Fund where he is a trustee, revealing the $850m fund recently made a non-US investment with an (unnamed) infrastructure firm via a customized low-carbon solution.
He explained: “So we were able to go to that manager and he customized a vehicle for us that pursued most of the investments that he did but he adjusted for us given our priority on decarbonizing the portfolio.”
Lawson saw this as an innovation that would gain traction, saying many of the leading asset managers in both public and private markets are thinking how to respond to client interest in impact investing in a way that’s “robust”.
“I think a tremendous win for the industry is if managers that have a demonstrated track record of excellence in investing are able to offer solutions for their clients that want a particular value alignment,” he told interviewer Jake Siewert.
He went on to say that “one of the things that we’re focused on is making sure that we use our buying power to encourage established managers to do that on behalf of our clients.” Plus Lawson added it was terrific as well that there are newer managers committed to ESG bringing new skills to the market.