ESG Phenomenon: US Clients Lag On Sustainable Allocations

Editorial Staff

18 February 2021

Cambridge Associates
As interest in sustainability gathers steam, , a group made up of major investment professionals from across the globe, at organisations such as California’s CalSTRS, Federated Hermes and Avida International, has launched a white paper claiming that the current investment management industry is not “fit for purpose”.

The document, called The Role of the Investment Management Industry and a Prescription for the Future, said portfolio managers should focus on long-term absolute returns (generally seven years or more) with levels of absolute risk to capital and time-horizons being set according to the particular needs of the investors being served. Fees and manager incentives must be changed to support “sustainable wealth creation,” it said.

“The current pandemic has created a moment for soul-searching on the state of the investment industry. During this crisis, we have all been reminded that companies should not just be profit-generating machines but purposeful providers of long-term sustainable wealth creation and solutions that benefit the individuals that make up society,” Stefan Dunatov, Chairman of The 300 Club, said. “The means to achieving the goal of sustainable wealth creation is the careful stewardship of investors’ capital in the way it is allocated and active stewardship of those investments once they are made. Both active and passive managers can play a vital role by working together collectively on this.”

Besides Dunatov, who is executive vice president, investment strategy and risk, British Columbia Investment Management, other prominent figures at The 300 Club are Chris Ailman, Chair, 300 Club North American Chapter; chief investment officer of the California State Teachers' Retirement System (CalSTRS); Jaap van Dam, chair, 300 Club European Chapter; principal director of investment strategy at PGGM; Sally Bridgeland, member, 300 Club; senior consultant, Avida International; Dame Elizabeth Corley, member, 300 Club; chair of the Impact Investing Institute, and Saker Nusseibeh, CBE, founder, 300 Club; CEO, International at Federated Hermes.