With environmental, social and governance (ESG) exchange traded funds increasingly popular ideas among advisors and retail investors alike, there’s also increasing scrutiny on how products in this category deliver the purported ESG goods.
That scrutiny is warranted because the various index issuers providing benchmarks to ETF sponsors approach ESG in differing fashions. One way of looking at that scenario is that investors should prioritize an index provider’s experience in ESG and thoughtfulness in applying ESG ratings and standards.
On those notes, advisors may want to evaluate Candriam. A unit of New York Life Investments, Candriam has deep ESG experience and is one of the pioneers in this field.
“Candriam has continued to offer innovative ESG strategies, with recent strategy launches focused on thematic investing along ESG-related trends. In 2020, Candriam launched a thematic equity strategy devoted to developing a more circular economy. This strategy invests primarily in global companies contributing to recycling, replacement of raw materials, repurposing end-of-life products, and rationalization of resource use,” according to New York Life.
While some index providers focus on exclusionary tactics to construct ESG indexes, particularly in the world of equities, research serves as the cornerstone of the Candriam approach. Over the long haul, that methodology could enhance investors’ ESG outcomes.
“Independent research is a cornerstone of Candriam’s approach to sustainable investing. The in-house ESG team combines business and stakeholder analysis, then layers norms-based analysis to screen out controversial names and includes country-by-country analysis to produce a sovereign sustainability score,” added New York Life.
Candriam focuses on three pillars in its ESG process – the ongoing global energy transition, business ethics, and fair working conditions.
“Candriam has dedicated over two decades to engaging with companies on responsible investing through proxy voting, direct dialogue, collaborative dialogue, and the promotion of sustainable finance,” noted New York Life.
Advisors and investors can gain the benefits of the Candriam ESG methodology by way of ETFs, including the IQ Candriam ESG US Equity ETF (IQSU) and its international counterpart, the IQ Candriam ESG International Equity ETF (IQSI). IQSU is one of the most cost-effective funds in the ESG ETF category.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.