The Covid-19 pandemic seems to be marking a major change in thinking and perceptions across health, justice, as well as, in government, corporate, and personal responsibility. All of a sudden the concept of “social responsibility” is less conceptual or academic and is now more visceral and relevant to daily life, business, and employment realities. Every day in the news, in personal discussions, and in our attempts to deal with this massive disruption in our lives, we can now clearly see interconnections and consequences.
In the area of investing, there is no more pronounced momentum change than in the attention and movement towards social investing. Morningstar reported that in Q12020 global sustainable funds saw inflows of $45.6 billion versus the broader fund universe having an outflow of $384.7 billion.
Further facts reported by Bob Smith of Sage Advisory indicate that this impressive growth in investor demand in ESG may be found in the ETF and fixed income markets as well, not just mutual fund flows. The inflow of assets into ESG ETFs, primarily in equities, has picked up steam in the past 12 months to an assets under management (AUM) base of $25.2 billion as of April 30, 2020 from $5 billion just 18 months ago. Investor flows into fixed income ESG investment vehicles also picked up in reaction to the violent volatility exhibited across the credit spectrum and from investor preferences for values-based investing that offers competitive performance with favorable downside protection.
Looks like some form of an inflection point has been developing.
To get a better understanding of what is happening in this new evolving environment, the Institute for Innovation Development decided to reach out to a cross-section of socially responsive asset managers — from ESG to impact to focused thematic strategies — and get their real world, in-the-trenches perspective and thought leadership. We would like to thank Ultimus Fund Solutions — one of the largest independent fund administrators — who provided introductions to some of their socially responsive asset manager clients and that has created fund vehicles for all of them to enable more access for investors to socially driven investment options.
Let me introduce you to our panel and then we will jump into getting a true lay of the land from the following experts in this field:
Erika Karp, founder and chief executive officer, Cornerstone Capital Group — a New York City-based registered investment advisory firm whose mission is to serve clients who wish to align their investments with their impact priorities without sacrificing financial returns.
Robert Uek and Bill Page, co-managers of the Essex Environmental Opportunities Fund — Essex is a Boston-based investment manager that operates at the nexus of environment and finance investing in companies that enable greater natural resource and energy efficiency.
Matthew Blume, director of ESG research and shareholder activism, Appleseed Capital — the institutional impact investing group of Pekin Hardy Strauss Inc., a Chicago-based independent firm providing funds and separate account strategies for investors that support their values through impact and ESG investing.
Robert G. Smith, president and chief investment officer, Sage Advisory Services — an Austin-based advisory firm that offers fixed income and equity ESG investment solutions that embody a commitment to sustainability and responsible investing.