Page 19 - Investment Advisor - Jan/Feb 2021

ESG HORIZONS

By Bernice Napach and Melanie Waddell

Will 2021 Be the Year Advisors Embrace

Sustainable Investing?

Many investors are asking for it, relative performance is strong and asset

managers are providing more investment options.

his could be the year that advi-
sors, like many investors and
T asset managers, embrace sus-
tainable investing or at least consider
it seriously.
“Interest has gone up tremendously
in 2020,” says Jeffrey Gitterman, head of
Gitterman Wealth Management, an RIA
that specializes in sustainable investing.
“Our climate strategies are the most
popular. The transition (to zero emis-
sions) is here and not going away.”
Gitterman cited the recent launch
of Aladdin Climate, a new feature of
BlackRock’s Aladdin portfolio man-
agement software that helps advisors
quantify climate risk and low-carbon ing “a tectonic shift in capital towards funds, focused on investing in assets that
opportunities in portfolios, as well as sustainable assets.” will have a positive impact on E, S and/
Moody’s data on physical climate change And through the third quarter a or G issues.
risks and MSCI’s climate change scenar- record $31 billion flowed into ESG funds In the meantime, many fund compa-
io analysis, provided by Carbon Delta, while nearly 400 ESG-focused funds nies, even those that don’t have specific
which it acquired in late 2019. launched — including ETFs and open- ESG funds like T. Rowe Price, have inte-
“The great repricing is coming,” end funds, according to Morningstar. grated ESG analysis across their port-
Gitterman said. “All data companies and “Demand has gotten to the point folios and plan for more sustainable
reinsurers are looking at risk not yet where most investors could use ‘40 Act investing offerings, analysis and/or tar-
priced into the market.” funds to construct a broadly diversified geted activities on sustainability issues
There’s no denying that interest in sus- allocated portfolio of sustainable funds,” with corporate management through
tainable investments and policies is rising. said Jon Hale, Morningstar’s global head direct engagement and/or proxy votes.
US SIF, the Forum for Sustainable and of sustainability research. T. Rowe Price expects to launch its
Responsible Investment, reports that He noted there is increasing num- first impact fund in 2021. BlackRock
U.S.-domiciled assets under manage- ber of model portfolios consisting of says it will use a sustainability lens in
ment using sustainable investing strate- just ESG funds, including BlackRock’s its 2021 capital market assumptions and
gies grew from $12 trillion at the start of iShares Platform with iShares ESG that its votes on shareholder resolutions
2018 to $17.1 trillion at the start of 2020, Aware allocation portfolios, which tend will will play an “increasingly important
an increase of 42%. to take a “lightest touch” approach to role” in its “stewardship efforts around
pogonici/Shutterstock survey of several hundred institutional egies are funds that exclude certain efforts to achieve net-zero emissions
BlackRock’s first sustainable investing
screening investments.
sustainability,” focusing on companies’
Beyond such ESG integration strat-
by 2050 or sooner. (Despite pronounce-
clients in 27 countries with $25 trillion
ments from BlackRock CEO Larry Fink,
companies and sectors to align with
in AUM released in early December
found that half expect to double sustain-
the firm’s proxy votes have disappointed
investors’ values — often called socially
responsible investments — and impact
sustainability activists.)
able assets within five years, exemplify-
JANUARY/FEBRUARY 2021 INVESTMENT ADVISOR 17