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The biggest headache facing ESG managers

Clearing the misconceptions that investors would need to give up returns to invest in ESG funds remain one of the biggest headaches facing ESG managers

Felix Lam, BNP Paribas Asset Management
Senior portfolio manager

In Asia, investors are still trying to understand the definition of environment, social and governance (ESG) and socially responsible investing and the various acronyms that come with it.

Convincing clients that there is no need to give up returns in sustainable investments is a challenge. As such, many private banks have increasingly become more active in partnering with asset managers to educate investors.

The growth in ESG-related investment options available to investors has also further aided the process of educating investors about ESG.

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Felix Lam, BNP Paribas Asset Management
Senior portfolio manager

In Asia, investors are still trying to understand the definition of environment, social and governance (ESG) and socially responsible investing and the various acronyms that come with it.

Convincing clients that there is no need to give up returns in sustainable investments is a challenge. As such, many private banks have increasingly become more active in partnering with asset managers to educate investors.

The growth in ESG-related investment options available to investors has also further aided the process of educating investors about ESG.

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AA-rated Thomas Schaffner, Vontobel Asset Management 
Portfolio manager

The biggest challenge is the common misconception about the benefits of applying ESG standards to the investment process.

Some investors believe that integrating ESG into the investment process means giving up returns. To overcome this, we make sure our clients and prospects understand that our process is financially motivated, and that we are stock pickers and ESG is part of our approach.

The integration of ESG issues is an important risk management tool. We can demonstrate that eliminating weak ESG companies improves shareholder returns.

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AAA-rated Kim Catechis, Martin Currie
Head of global emerging markets

We are witnessing a gradual, but inexorable shift in the right direction. For example, in the area of environment policy, Beijing is vigorously prioritising best practice.

In Brazil, meanwhile, it is soon going to be obligatory for corporates to increase transparency of executive rewards, reversing years of non-disclosure due to historically legitimate concerns of kidnapping and ransom risk.

This is not due to poor underlying practice. It is often simply a matter of disclosure, with management lacking an understanding of why these factors are of interest to investors and how they can be most effectively reported on.

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A-rated Pieter Busscher, RobecoSAM
Portfolio manager

Despite the massively increased interest in sustainable investments, we still see that some investors are not yet fully familiar with the different approaches.

All players in the field must continue educating the market about the characteristics of the approaches within ESG investing.

Nevertheless, sustainability investing has gradually become a top priority for the largest asset owners and allocators around the world.

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Pieter Busscher
Pieter Busscher
2/14 in Equity - Basic Industries (Performance over 3 years) Average Total Return: 65.34%
Kim Catechis
Kim Catechis
23/524 in Equity - Global Emerging Markets (Performance over 3 years) Average Total Return: 53.88%
Thomas Schaffner
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10/226 in Equity - Asia Pacific Excluding Japan (Performance over 3 years) Average Total Return: 59.96%