Environmental, social, and governance (ESG) investing is a relatively new approach that continues to evolve. ESG criteria developed gradually over the last few decades, and private fund managers must keep adapting their interpretations to meet changing investor demands.
Emerging fund managers must be aware that ESG criteria are likely to play a larger role in the future. We integrate ESG with other fundamental factors when making investment decisions. ESG issues are also a meaningful part of our discussions with fund managers.
A Commitment to Our Investors
Higher returns from ESG investing
Firms with high environmental, social, and governance (ESG) ratings are better at retaining customers and employees, cutting costs, and managing the regulatory and compliance landscape.
It is possible to focus on ESG without sacrificing returns, in fact, we have seen higher returns from ESG-focused entities.
Incorporating ESG criteria is increasingly crucial for private fund managers due to the concerns of their investors. High-net-worth individuals have the money to invest in causes they support and generally have little interest in taking unnecessary ethical risks.
Our portfolio managers implement ESG by using several different approaches. We evaluate the effects of ESG on revenue and cash from operations, cost of capital, and brand perception for the companies we invest in. We also carefully evaluate the environmental and labor standards for our potential investments.
Accountability and Transparency
Corporate governance is a key focus
We maintain a vigilant focus on governance because it is an easy and effective way to mitigate risks. We prefer independent boards, few related party transactions, and simple organization structures.
Good governance also involves establishing procedures that embody best practices and a focus on compliance.
For family offices, the appeal of climate tech lies not just in its growth potential but in its ability to generate positive environmental impacts. This dual promise of financial returns and societal benefit aligns well with the values of many family offices.
The structure, risk, and return on green bonds are much like those of traditional bonds. However, these types of bonds are aimed at promoting energy efficiency, pollution prevention, sustainable agriculture, fishery and forestry, the protection of aquatic and terrestrial ecosystems, clean transportation, and water.
ESG criteria developed gradually over the last few decades, and private fund managers must keep adapting their interpretations to meet changing investor demands.
