Effective ESG Integration

Ellis: You mentioned the global scale of Eaton Vance’s work. A number of large asset managers in Europe are integrating ESG analysis across all of their portfolios. Any thoughts when we will see that type of ESG integration in the U.S. markets?

Streur: This is a critical point. The concept of integrating ESG research into an investment process is important to understand. The deep research necessary to analyze a company effectively related to managing the risks and taking advantage of the opportunities that are part of ESG analysis is very similar to fundamental investment research of a company’s financial results.

This is what ESG integration is all about, understanding a firm’s future financial potential based on the management team’s capabilities related to resource efficiency and managing environmental risks, as well as the way that company engages with the parts of society that it impacts. What do these things tell us about that company’s future financial results? That, to me, is ESG integration. That’s what we’re working on at Calvert.

For many people, ESG integration is simply, “We’ve considered these metrics because we have access to the information.” I think we will get to a point fairly quickly where many asset managers make the statement, “We consider ESG information in our investment process.” I do not think we will find very many asset managers who are developing a deep understanding of ESG analysis as Calvert has, for many years to come.

This is Calvert’s leadership position. As a part of Eaton Vance, we can capitalize on this. In other words, our objective is to be a leader in integrating our research into the decision-making process in order to find the companies that really qualify as leaders, the companies where we can expect to get a good investment outcome as a result of management’s expertise around ESG analysis.

The Role Of Advocacy

Ellis: John, Calvert has been one of the primary advocacy organizations in sustainable investing for many years. Do you anticipate any major changes to this role under Eaton Vance’s leadership?

Streur: Paul, we think that advocacy is one of the major elements of responsible investing. First, let’s get the returns right through an efficiently managed portfolio. Second, let’s fully research and understand the impacts that our companies are having on society and the environment, and how well management deals with those risks and opportunities. Third, let’s make sure that we align our proxy voting so that it’s consistent with our knowledge and our beliefs, and when necessary, engage with company management, NGOs and the public to move our business environment forward. This is a critical part of being a responsible investor. With additional resources to support our efforts, we expect advocacy to be more effective and more robust than ever.

Ellis: John, investment industry opinions about the impact of the Trump administration on the U.S. and global financial markets are all over the map, and not just in the sustainable investing community. What’s your perspective on how Calvert Research and Management will deal with a regulatory environment that’s sure to be different from the past eight years?