Nuveen’s investor clients are still demanding values alignment as their starting point, while also expecting ESG integration. O’Brien believes an important next step in the industry is to segment and understand more clearly why clients come to ESG mission aligned investing. An engineer might buy into into ESG risk management protocols, whereas a public policy wonk might like the way that values-first investing aligns with global impact frameworks like the U.N. Sustainable Development Goals (SDGs). “We have to show them how ESG matters across the board and how we’re making progress on measuring impact.”
For O’Brien, how to measure impact is the next big wave for our industry. “I think we’re in early days,” offered O’Brien. “You can invest in a company with a high ESG rating, but how does that translate? How were carbon emissions reduced based on your investment?” If ESG is about evaluating a company or investment issuer, impact is about measuring “what’s really changed in the world or in a community because this investment was made.” These are the kinds of proof points, according to O’Brien, that are going to win the hearts and minds of a broader range of clients that might be attracted to this field, but still misunderstand or don’t yet believe that investors can create real change and also achieve their financial objectives.
O’Brien is convined that more constructive dialogue and collaboration between companies, investors and policy makers will go beyond the current polarization around policy issues like climate change. For O’Brien and her team, these are investment issues. And as more dollars flow into RI investment strategies, more green bonds are issued, more low carbon standards get traction, O’Brien will continue to lead, “to connect the dots and show investors we are taking action on these issues and we’re trying to bring these conversations together."
Paul Ellis founded Paul Ellis Consulting to work with financial advisors who want to integrate sustainable and impact investment strategies for their clients.