Impact Blog
From upstream to mainstream: ESG at a tipping point

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Calvert disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Calvert are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Calvert fund. References to individual companies for Engagement or Research purposes are provided for illustrative purposes only and may not be representative of the results of all of Calvert’s engagement efforts. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By Anthony Eames, Director of Responsible Investment Strategy, Calvert Research and Management

      Boston - Calvert believes that we are at a pivotal moment for Responsible Investing. A combination of client interest, product availability and global events have placed investments that adhere to environmental, social and governance (ESG) principles squarely in the spotlight.

      Calvert recently sponsored a white paper produced by InvestmentNews called "From upstream to mainstream: ESG at a tipping point."1 The data included in this report indicates that investors across age ranges and income levels are showing greater interest in ESG investing.

      Not surprisingly, financial advisors appear to have noticed this trend and are paying more attention. Results from the Q3 2018 Eaton Vance Advisor Top-of-Mind Index (ATOMIX)* survey, which generated responses from more than 600 advisors, found that 79% reported that they incorporate Responsible Investing into their practice.2

      Where client and advisor interests go, assets follow. According to a US SIF report released in November 2018, sustainable, responsible and impact investing assets have expanded to $12.0 trillion in the United States. This represents a 38 percent increase from $8.7 trillion in 2016.

      While both client and advisor interest has increased, some advisors acknowledge the need to learn more. Only 35% of advisors who responded to the ATOMIX survey classified themselves as "very well-informed" about Responsible Investing. As this mainstreaming of ESG continues, it will become more difficult for advisors to serve clients unless they can close the knowledge gap. The insights contained in this Investment News white paper should help in that regard.

      The next phase

      As we enter a new phase in Responsible Investing, Calvert believes that an increasingly sophisticated and savvy client base is demanding more from its portfolios, seeking investments that offer positive impact alongside competitive returns.

      While ESG investing traditionally has emphasized negative externalities, "ESG 2.0" adds an emphasis on the positive impact an investment can achieve. Instead of simply avoiding companies with poor ESG behaviors or engaging with them to stop negative behavior, we are recognizing opportunities that arise when companies seize the imperative and use ESG analysis to enhance their strategic position.

      Bottom line: When integrated with business and financial analysis, ESG analysis allows investors to examine both risk and opportunity in a more comprehensive way. As the market - and appetite - for Responsible Investing continues to grow, the possibilities for advisors to advance their businesses should rise as well.