Responsible investment

ESG Roundtable Summary

Highlights of our inaugural ESG Research Roundtable with Rosenberg Equities, a discussion on diversity as a competitive advantage and the future of data.

Key research shared:

  • How diversity can drive profitability
  • How investors can benefit from new and emerging data sets
  • How we reconcile the wide variety of ESG and ‘impact’ data that is now available to equity investors

Highlights:

The roundtable was very interactive and well attended by various members of the asset management industry, all of whom have a focus on ESG and its integration.

The discussion centred on two important areas:

  • How diversity can preserve and drive future profitability - Kathryn McDonald, Head of Sustainable Investing:
    Discussion started on our research that diversity provides a profitability moat to companies and helps them remain competitive over the long term. Given the importance of earnings’ quality we are always interested in ways we can better identify and predict measures of this key investment factor. Our research shows that gender diversity is closely associated with higher future profitability - a core ‘quality’ concept - and helps firms better withstand competitive forces. These results support the idea that going forward, diversity is not just a ‘nice to have’ but a ‘must have’.
  • The future of data - Alexander Ions, Head of Alternative Data Research:
    One area which has captured investors’ interest is the rapid rise of alternative data including Environmental, Social and Governance (ESG) information. We highlighted several new types of data available to market participants, the various investment insights they bring and showed how we can use visualisation techniques to better understand relationships across data sets and their impact on client portfolios.

Main conclusions of the morning:

  • Putting aside the question of morality, we find evidence that diversity is ‘economically correct’ in that it is associated with positive economic outcomes for companies.
  • As investors, our interest in diversity, governance, and ESG generally is grounded in the relationships we have found between ESG concepts and the fundamental drivers of risk and reward in the equity market.
  • Most importantly, for those of us committed to diversity in the workplace, these results support the idea that diversity is not just a ‘nice to have’; we believe it is instead a ‘must have’ in the face of intense market competition.
  • New and emerging data sets that are now available to help measure ESG and ‘impact’ require through analysis before being included in investment decision making
  • ESG is implemented across all of our Rosenberg Equities offerings

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