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2022 ESG & Sustainability Outlook

Multiple authors
2022-12-31
Archived info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.

The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.

Introduction

Taking action: How your organization can build climate change resilience in 2022

In a recent speech, Janet Yellen, US Treasury Secretary and former chair of the US Federal Reserve, addressed a global audience of finance ministers, policymakers, and investors in Glasgow ahead of the UN Climate Conference of the Parties (COP26). Ms. Yellen said, “The flow of capital from carbon-intensive to carbon-neutral investments is the most dramatic and predictable economic shift in human history.” As investors and fiduciaries of our clients’ capital, we believe we must understand this shift in order to fulfill our primary mission: exceed our clients’ investment objectives.

Three years ago, we entered into a research partnership with Woodwell Climate Research Center to bridge the knowledge gap between climate science and finance. Our goal then, as now, is to integrate climate data and insights into our investment approach to produce better financial outcomes for our clients. While we continue to expand our climate investing offerings, our goal is not only to provide climate solutions for our clients, but also to incorporate our growing knowledge of climate change across our investment and operational platform.

Please see our 2022 Climate Investing Outlook for insights from our Climate Research and Investment teams.

Istrat insights

Sustainable thematic investing: Climate action and economic development

Nearly two years of a global pandemic, sluggish growth, and record climate-related disasters have exposed the need to narrow economic inequities and manage our natural resources in ways that ensure the well-being of future generations and the environment. The global focus on sustainability is accelerating thematic shifts, creating structural tailwinds, and driving investment opportunities across sectors. We view sustainability-aligned themes as multi-decade opportunities that are just beginning to gain momentum. While we accept that there may be some volatility in these areas in 2022, we will continue to combine our top-down thematic and bottom-up fundamental process to stock selection.

In 2022, our attention will be on companies addressing some of the world’s most pressing needs, including climate action and sustainable economic development, notably in the themes of education and enterprise intelligence. We anticipate growing demand for solutions and already see a range of preemptive investment opportunities.

Impact Insights

Impact investing: Seeking solutions that help the world recover

In 2022, research across our 11 impact themes continues with a particular focus on impact opportunities in financial inclusion, digital divide, and health. As always, we aim to invest in companies and issuers whose core goods and services address the world’s biggest social and environmental challenges. The COVID-19 pandemic and ensuing economic slowdown exacerbated fundamental socioeconomic inequities and heightened the need for financial-, digital-, and health-related solutions. In the coming year, we will also examine several themes through the lens of climate change, noting the accelerating demand for climate adaptation and mitigation, as well as the growing overlap between climate and impact investing solutions.

Stewardship Insights

Stewardship investing: Talent, supply-chain, and environmental management

We aim to invest in companies that lead from a position of strength, with skilled management and empowered boards who consider the interests of all stakeholders. Stewardship often requires making difficult trade-offs that affect stakeholders differently. As we emerge from the COVID-19 pandemic, we believe it is more critical than ever for companies to balance their pursuit of profits with their impact on people and the planet. Amid increasing calls to action for firms to be better stewards of talent, supply chains, and the environment (particularly regarding biodiversity), we plan to focus on these issues in the coming year.

Authored by
cromwell-wendy-316x316
Wendy Cromwell, CFA
Head of Sustainable Investment
Boston
dunne-daire
Dáire Dunne, CFA
Portfolio Manager
Singapore
Campe Goodman
Campe Goodman, CFA
Fixed Income Portfolio Manager
Boston
Tara Stilwell
Tara Stilwell, CFA
Equity Portfolio Manager
Boston
Liliana Castillo Dearth
Liliana Dearth
Equity Portfolio Manager
Singapore
yolanda courtines
Yolanda Courtines, CFA
Equity Portfolio Manager
London
Mark Mandel
Mark Mandel, CFA
Equity Portfolio Manager
Boston