Despite record low unemployment and a strong economy, 60% of Americans say the country “is not working for them,” according to Lady Lynn Forester de Rothschild, CEO of E.L. Rothschild.
Rothschild sat with Nuveen president and CIO Jose Minaya at the start of the SALT 2019 Conference in Las Vegas Wednesday morning for a frank discussion of the role environmental, social and governance (ESG) factors play in investing and society as a whole.
“What can we learn here today to make our investments better and our world better?” Forester rhetorically asked at the session’s outset.
Quoting The Leopard, she quipped “If you want things to stay the same, something has to change,” before adding “the power of markets is incredible, and can make things better through sustainable, strong, inclusive capitalism.”
Asking Minaya about Nuveen’s efforts in the space, he noted it’s $1 trillion investment portfolio, of which roughly $200 billion is invested in alternatives.
“We have five decades of leadership in the space, and responsible investing is one of our three pillars,” he said. “We’re hearing the dialogue shift, and Millennials specifically, want investment managers that share their values. We recently conducted a survey that found 52% of high-net-worth individuals overall said they would include all of their portfolio in strategies that employ responsible/ESG factors. With Millennials, that number rose to 90%.”
Risk factors
Pointing to PG&E and California wildfires and Volkswagen “from a corporate governance standpoint,” ESG is increasing a way to identify risk, rather than something that’s strictly “exclusionary.”
Prompted by Forester about whether all investing will eventually be ESG investing, he added “it’s where we are on the J-curve. Increasingly, it’s about how we include more of this, and it’s about data. Our goal at Nuveen is to get 100% of our managers using these factors but we’re committed to bringing out the data and transparency around it.”
Which is a major issue, Forester interjected, as there is no uniform analysis of ESG when evaluating companies, especially when compared with financial analysis and measurements.
“Will we get to a point where we can accurately measure what matters?” she asked.
“Yes,” Minaya argued. “We know it’s right for our portfolios and clients, but it will take investment of dollars in data.”
“It’s a race to the top for the best companies in how they treat their employees, investors and planet,” Forester concluded.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
