Pinning hope on “ESG hot dots” and simply layering on third-party ratings and screens are not how Touchstone Investments approaches environmental, social and governance investing. Tim Paulin, senior vice president of investment research and product management, recently shared that assertion and more on CitywireUSA.com.
“Touchstone focuses its efforts on asset managers that can evidence long histories of integrating ESG factors into their investment processes,” said Paulin, “and active engagement with companies to drive improvements in their ESG standards.”
Among his observations:
- “While many asset managers are anxiously raising their hands to say, ‘we can do that,’ the reality is that managers often lack evidence that they can effectively integrate ESG criteria while both delivering alpha to investors and engaging companies to improve performance.”
- “We should be demanding of these managers, ‘show me your record for accounts integrating ESG.’ There are relatively few managers and strategies that can offer professional buyers such evidence.”
- “ESG investing is, by its nature, an active pursuit.” Given that many companies already rate highly on ESG metrics, the opportunity for making ESG laggards better may hold greater potential.
- Touchstone believes corporate engagement accelerates ESG improvement. There are, however, “relatively few asset managers with the clout, expertise and resources to aid in that process.”
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