Environmental, social, and governance policies and investing have become targets of political derision. That doesn’t dampen the need for corporations and governments to pursue agendas tied to climate change and diversity, equity, and inclusion.
Bolstering the long-term case for ESG and sustainable exchange traded funds, including the Calvert US-Mid Cap Core Responsible Index ETF (CVMC), Calvert US Large-Cap Diversity, Equity and Inclusion Index ETF (NYSE Arca: CDEI), Calvert US Large-Cap Core Responsible Index ETF (CVLC), and the Calvert US Select Equity ETF (NYSE Arca: CVSE), is the point that climate science is hard to debate.
Studies suggest companies taking steps to avoid ESG controversies often outperform rivals trailing in those departments.
Compelling Runway for ESG ETFs
ETFs such as CDEI, CVSE, and their Calvert stablemates could be set up for long-term success. That’s because more market participants want exposure to climate-aligned investments, and with good reason.
“Climate change is affecting the global economy and promises to do more harm if we continue with a business-as-usual approach,” noted Günther Thallinger, chair of the UN-convened Net-Zero Asset Owner Alliance, in an op-ed for The Hill. “Damages from natural disasters, which are exacerbated by climate change, totaled $165 billion in 2022 alone. According to a study by Swiss Re, a multinational reinsurer, climate change could reduce economic output worldwide by $23 trillion by 2050, equivalent to the entire U.S. GDP in 2021.”
There’s also a rising case for the combination of ESG and active management, which is accessible via the aforementioned CVSE. That’s because asset managers have fiduciary duties to do what’s best for clients. And that can include encompassing climate and other ESG principles in the investment screening process.
“The need to respond to this is fundamentally an individual responsibility. Nevertheless, in the face of the existential threats posed by climate change, it is widely recognized that there are efficiencies gained from working independently in a joint effort,” added Thallinger.
CDEI, CVLC, CVMC, CVSE, and the other Calvert ETFs are potentially appealing on another front. While these funds have clear ESG/sustainability credentials, they are not positioned in ideological form. Nor are they attempting to drive a political point. That may imply Calvert ETFs appeal to a broader audience over some old-guard funds in this category.
For more news, information, and analysis, visit the Responsible Investing Channel.