By Richard Lightbound, CEO—EMEA, ROBO Global
We have entered an extraordinary age of transparency. For the first time in history, shareholders, customers, employees, and society as a whole are demanding that businesses make themselves 100% visible. The outside world is now seeking an open window into every aspect of operations, such as financial data, employee grievances, email communication, #MeToo scandals, and more. Included on that long and growing list is ESG—a company’s environmental, social, and governance policies. And almost every piece of that information is available online to anyone who knows how and where to look.
For investors, this shift to transparency has significant implications. Corporate investors need to be able to answer to their clients, a growing number of whom see ESG and impact investing as the ideal tools to align their values with their investment strategies. Retail investors face the same challenge and, indeed, the same opportunity.
It wasn’t long ago that this focus on ESG was confined almost entirely to ‘radical’ investors—Millennials, liberals, and anyone who put their hearts far above their wallets—who were committed to investing only in vehicles they could feel good about, but that weren’t necessarily the best options from a returns perspective. But with the push toward transparency has come a growing consciousness on the part of the wider world of investors about how exactly they want their invested assets to be used.
When we first introduced the index five years ago, most conversations with investors interested in exploring the ROBO Global Index Series—small banks, large pension funds, and every investor in between—were focused on the business fundamentals and growth potential of our index members, the total cost of return of our index-based fund, and the exciting research from our strategic advisors. That’s no longer the case. While the ESG movement is still in its earlier stages in the US, in the UK and Europe where I spend the bulk of my time, ESG is not an option, it’s an absolute requirement. Today, the first question from nearly every investor I speak with is: “What is your ESG policy?”