“Is there greater weight of this currently? Yes,” he said of social and governance issues. However, “the framework we use hasn’t changed.”
Technology Bridge
One solution to long-term investment gains may lie in stocks and debt of technology assets that are linked to ESG, funds say.
About one billion people in emerging markets already use mobile technology for health care services, according to Loomis Sayles. By 2025, 75% of people in such markets may have access to smartphones, fueling a jump not just in ESG, but in industries from education to logistics.
That’s a trend that already existed. Technology and finance stocks tend to make up the biggest weightings in benchmarks such as the MSCI ACWI ESG Leaders Index, accounting for more than a third of the gauge.
“Some of the trends that were happening anyway in markets and in portfolios were strengthened by Covid,” said Andrew Gillan, a money manager at Janus Henderson Group PLC, whose Asia Pacific equity fund has beaten 95% of peers in the last five years. “The winners continue to win in IT, e-commerce.”
Chinese tech behemoth Alibaba Group Holding Ltd. is one company that is channeling more efforts into ESG, while at the same time benefiting from a move to online economies.
“We clearly can see that the way we do business is changing and becoming more digital,” said Adrian Zuercher, co-head of global asset allocation at UBS Wealth Management in Hong Kong. “EM markets which have relied more on natural resources and traditional manufacturing business will face a more uncertain future.”
This article was provided by Bloomberg News.