investment-oriented | PLANADVISER January/February 2017

Investing in Harmony

By Lee Barney | January/February 2017

In the past, SRI and ESG investing were viewed as compromising performance, Voorhes says. Today, it is quite the opposite: Socially responsible corporations are viewed as having solid long-term strategies that can deliver returns on-par or even higher than companies that do not employ these principles, she says. For example, the Brown Advisory Sustainable Growth Fund invests in companies whose environmental strategies are generating tangible business results, in the form of revenue growth, cost improvement or enhanced franchise value, says David Powell, co-portfolio manager of the fund, in Baltimore.

In fact, this is precisely why Voya Investment Management employs ESG screens for all of its investments, says Drew Schechtman, vice president and ESG integration leader at the firm, in New York City. In the past three years, inquiries about ESG investing among Voya’s clients, which include retirement plan sponsors, has increased 300%, he says.

For all of these reasons, advisers may want to understand the ESG offerings and be prepared to explain IB 2015-01 to plan sponsors and investment committee members who are interested, or are seeing indications of participant interest, in such investment offerings.

Key Takeaways

  • Assets in socially responsible investments have grown 33% between 2013 and 2016, to $8.72 trillion.
  • Millennials and Generation X are twice as interested as the general population in environmental, social and governance investing.
  • Natixis is the first investment management firm to launch ESG-oriented target-date funds.