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Trends with Benefits #28: ESG Performance with Mark Sloss

September 29, 2020

Listen Time 30:55 MIN

 

A trend decades in the making

In 2020, ESG’s time may have finally come. Investing based on environmental-, societal- and governance-oriented principles is a trend influencing fund development, government regulations and attracting investor fund flows. It can be a complicated topic, particularly if you’re trying to find the best approach. The good thing for investors is that there are a myriad of approaches to ESG investing. The bad thing for investors is that there are a myriad of approaches to ESG.

ESG is a topic I love to hate. Not because of the intent of it, but more because many of the methodologies now in play try to distill seemingly subjective decisions into a “check-the-box” type of exercise. In some cases, good and responsible companies may be left out of a portfolio or, in other cases potential exclusions were missed. This summer, fashion company Boohoo made headlines when news broke that despite being given a high grade by many ESG ratings services, the company paid workers in its supply chain less than minimum wage and subjected them to unsafe working conditions.

No methodology is perfect, whether trying to identify good ESG companies or good large-cap quality growth companies. Ultimately it comes down to understanding the methodology, its biases, and whether or not it aligns with your intent. I actually love the idea that investors are increasingly requiring that their investment dollars align with their values and if doing good doesn't materially impact returns, why shouldn't everyone do it?

In 2020, ESG strategies generally have performed relatively well and record flows into ESG funds have followed. Performance, as I discuss with Mark, is also a complicated or at least nuanced topic. We discuss SRI (Socially Responsible Investing) the precursor to ESG and the long held perception of performance concessions with such values-based investing. I also discuss with him the relative importance of E, S and G in the total equation of things and ongoing efforts to standardize ESG metrics.

Trend or Fad

Listen for Mark’s take on single source coffee supply chains, stakeholder capitalism, and blockchain digital rights.

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IMPORTANT DISCLOSURES

Please note that Van Eck Securities Corporation (an affiliated broker-dealer of Van Eck Associates Corporation) may offer investments products that invest in the asset class(es) discussed in this podcast.

The views and opinions expressed are those of the speaker(s) but not necessarily those of VanEck. Commentaries are general in nature and should not be construed as investment advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. Any discussion of specific securities/financial instruments mentioned in the commentary is neither an offer to sell nor a solicitation to buy these securities. Fund holdings will vary. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index. Information on holdings, performance and indices can be found at vaneck.com.

ESG investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by VanEck or any judgment exercised by VanEck will reflect the opinions of any particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and VanEck is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful.

ESG integration is the practice of incorporating material environmental, social and governance (ESG) information or insights alongside traditional measures into the investment decision process to improve long term financial outcomes of portfolios. Unless otherwise stated within the Fund’s investment objective, inclusion of this statement does not imply that the Fund has an ESG-aligned investment objective, but rather describes how ESG information is integrated into the overall investment process.

All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.

Van Eck Associates Corporation

IMPORTANT DISCLOSURES

Please note that Van Eck Securities Corporation (an affiliated broker-dealer of Van Eck Associates Corporation) may offer investments products that invest in the asset class(es) discussed in this podcast.

The views and opinions expressed are those of the speaker(s) but not necessarily those of VanEck. Commentaries are general in nature and should not be construed as investment advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. Any discussion of specific securities/financial instruments mentioned in the commentary is neither an offer to sell nor a solicitation to buy these securities. Fund holdings will vary. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index. Information on holdings, performance and indices can be found at vaneck.com.

ESG investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by VanEck or any judgment exercised by VanEck will reflect the opinions of any particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and VanEck is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful.

ESG integration is the practice of incorporating material environmental, social and governance (ESG) information or insights alongside traditional measures into the investment decision process to improve long term financial outcomes of portfolios. Unless otherwise stated within the Fund’s investment objective, inclusion of this statement does not imply that the Fund has an ESG-aligned investment objective, but rather describes how ESG information is integrated into the overall investment process.

All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.

Van Eck Associates Corporation