Impact Blog

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

      Washington - In 2017, mighty winds blew in political storms as well as climate-related ones. Surprising election results, geopolitical unrest, and reports on climate change and income inequality drew media headlines, as well as investor attention.

      We believe a growing imperative to address environmental, social, and governance (ESG) issues is being felt by businesses and investors alike, and that in 2018, the following trends will drive further growth in responsible investment strategies.

      U.S. political climate

      Under the Trump administration, we have seen the U.S. exit the global Paris Agreement, largely dismantle the EPA, and roll back environmental regulations. In response, more states, cities, companies and universities have taken up the banner of reduced carbon emissions and clean energy, forming groups like the "We Are In" coalition.

      For investors, directing money to ESG strategies and companies with responsible practices and policies is a way to vote with their dollars. If people can't rely on the federal government to prioritize issues like clean water, living wages or diversity, there is recognition that more companies are doing so for sound financial and business reasons.

      Among the U.S. Fortune 500, for example, 240 companies (nearly 48%) have set renewable energy or carbon-reduction targets, as reported in Power Forward 3.0, and cite significant cost savings from these efforts.

      Proliferation of ESG products

      As interest in responsible investments has spiked across the retail, institutional and retirement 401(k) channels, so has the number of ESG product offerings.

      In the U.S., the number of investment products with ESG criteria -- including mutual funds, ETFs and variable annuities -- has compounded by 29% a year since 2010, according to the U.S. Sustainable Investment Forum.1

      Calvert Blog 1-12

      As concerns about ESG issues continue, we believe ESG products will capture an increasing share of the investment marketplace.

      Inequality a growing global threat

      Income disparity has climbed steadily over the past 30 years, in both developing economies and industrialized ones. A global issue, it is, perhaps surprisingly, most pronounced in the U.S. where the gap between rich and poor has widened the most.2

      We believe this trend, if left unchecked, will stifle economic growth, promote global instability and inflict significant human cost, as described in Calvert CEO John Streur's recent blog, The growing threat of inequality.

      Inequality creates a vicious cycle of underprivilege, limiting people's access to education, health care and job opportunities. This in turn may undermine a country's socioeconomic structure, diminish its intellectual capital, and limit overall GDP growth.

      Making a Difference

      Calvert Research and Management traces its roots to Calvert Investments, which was founded in 1976. We have been addressing issues related to human rights, the environment, diversity and income inequality since the 1970s, starting with divestment over apartheid. Currently, we are focused on income equality, climate change, diversity and health issues, including the opioid crisis. Increasingly, we are developing metrics to measure the impacts of our portfolio companies in terms of carbon emissions, water usage and their proxy voting records—and reporting these metrics to our shareholders.

      Bottom line: Where political will appears to have failed, investors and businesses are taking up the banner on issues like climate change and diversity. We believe responsible strategies are likely to gain increasing market share for decades to come.