Responsible investing isn’t just a localized growth opportunity, it’s truly a global trend that’s full of value generation. But where should advisors begin?
In the upcoming webcast, ESG: The Key to Portfolios with Both Growth And Value, Brian Griggs, Managing Director, Portfolio Strategist, Nuveen; and Margaret Leung, Managing Director, Head of ETF Distribution, Nuveen, will outline how advisors can generate alpha across style, size, and region with ESG strategies.
Investors can fill out their equity portfolios with U.S. ESG equity-related ETFs, such as the Nuveen ESG Large-Cap Value ETF (BATS: NULV), Nuveen ESG Large-Cap Growth ETF (NULG), Nuveen ESG Mid-Cap Value ETF (NUMV), Nuveen ESG Mid-Cap Growth ETF (NUMG), and Nuveen ESG Small-Cap ETF (NUSC), which screen companies of various market capitalizations and asset categories for environmental, social, and governance principles.
The Nuveen ESG International Developed Markets Equity ETF (NUDM) and Nuveen ESG Emerging Markets Equity ETF (NUEM) also align investors’ international equity investments with their values.
There is yet another option for fixed income investors who are interested in socially responsible investments. The Nuveen ESG U.S. Aggregate Bond ETF (NYSEArca: NUBD) and the Nuveen ESG High Yield Corporate Bond ETF (NUHY) help these investors pair their bond investment needs with ESG principles.
At Nuveen, the money manager employs several other ESG criteria to better-target companies that exhibit socially responsible characteristics. Nuveen applies an ESG rating to capture an issuer’s performance on significant ESG risks relative to peers, a controversy score that captures an issuer’s exposure and response to event-driven controversies, a controversial business investment component that captures an issuer’s activity in industries that may cause significant social harm, and low-carbon criteria that captures the carbon intensity of an issuer based on involvement in specific industries.
The three ESG factors cover three broad categories. Environmental refers to climate change, greenhouse gas emissions, resource depletion (including water, waste and pollution), and deforestation. The social aspect covers working conditions, including child labor, community and indigenous populations, operations in conflict zones, health and safety, employee relations, and diversity. Lastly, the governance factor is based on executive pay, bribery, corruption, political lobbying and donations, board diversity and structure, and tax structure.
The responsible investment and ESG-related investment strategy is not intended to sacrifice performance or lower returns for the sake of achieving their goals. ESG investments have even shown to generate improved risk-adjusted returns over time.
Financial advisors who are interested in learning more about ESG strategies can register for the Wednesday, May 12 webcast here.