With a highly volatile political environment, investors are re-evaluating their portfolios, and rightfully so. But nowhere does this re-evaluation make more sense than in ESG. Strategies focused on environmental, social, and governance factors are likely to be affected not just by short-term economic implications, but the longer-term policy goals of a Biden administration.
In the upcoming webcast, Positioning ESG Portfolios in the Next Administration, Megan Fielding, Senior Director, Responsible Investing, Nuveen; and Margaret Leung, Head of ETF & TIAA Wealth Distribution, Nuveen, will hash out the details of incorporating ESG investments into a diversified portfolio for the Biden administration ahead.
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 capitalization 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 also an option for fixed-income investors who are interested in socially responsible investments. For example, the Nuveen ESG U.S. Aggregate Bond ETF (NYSEArca: NUBD) and the Nuveen ESG High Yield Corporate Bond ETF (NUHY) helps fixed-income 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 investments can register for the Tuesday, December 1 webcast here.