New York, October 26, 2020: The ‘Respada ESG Summit 2020’ was held on Tuesday, 22 September, by Respada, an invitation-only niche platform providing private market opportunities to the ultra-affluent. The summit was a virtual confluence of companies and institutional investors who are influencers in ESG - Environmental, Social and Corporate Governance, and impact investing. Panelists included Kuni Chen, CFA, Senior ESG & Impact Investor, Harlin Singh Urofsky, Global Head of Sustainable Investing at Citi Private Bank, Sucharita Dasa, Sustainable and Impact Banking at Barclays, Libby Bernick, Senior Executive in ESG, Climate and Sustainable Finance and John Prince, CEO of Respada.
The summit began with Chen discussing the evolution of ESG in private equity. “Over the past years, we have witnessed private equity firms launching impact funds which typically link to the outcomes of the UN Sustainable Development Goals (SDGs). Their focus is on the product whether an impact product or an ESG product,” he said. However, in recent times, Chen noted a visible shift “away from ESG products towards ESG integration across the private equity portfolio.” Panelists observed that ESG-integrated portfolios tended to be resilient in volatile markets, which made such portfolios appealing to investors particularly during periods of uncertainty. Bernick added, “It is not just about sustainable investing, many fund managers are understanding that it’s really important to address environmental and social risks in a portfolio to maintain returns”. Highlighting a similar observation at Respada, Prince noted, “ESG was previously compartmentalised as an activity that is different from the primary business. However, we have achieved better integration today and family offices have come to understand the benefits of ESG - such as how it mitigates risk.”
It is not just about sustainable investing, many fund managers are understanding that it’s really important to address environmental and social risks in a portfolio to maintain returns
Moreover, Bernick highlighted that according to several studies on equities, there was no performance penalty for companies that aligned their business strategies with material and social issues. Consequently, she said that companies that are inclined towards ESG investments have begun to ask, “why wouldn't I do this if there is no performance penalty and I can have a positive impact with my investments?” That said, Prince added, “Oftentimes we need to understand that ESG has no magic wands, we fundamentally need to improve performance within the stack of a company and improve productivity or output of a company in an optimal fashion.”
Furthermore, Bernick stressed on the importance of transparency for standardisation in ESG reporting. She emphasised that “Even if you are using different ways to measure impact, what is really important is to derive transparency on the data.” She added that equities must be more transparent about their performance and in providing data “to ensure standardised reporting and frameworks for measuring impact.” Finally, panelists observed how family offices are transitioning to ESG investments both to reflect their mission and legacy, and also to engage their next generation. In addition, Bernick pointed out that “Responsible investing is not one-size-fits-all. It is customized and unique to individual families and their investment strategy.” In conclusion, Chen said “family offices and foundations are uniquely suited for the ESG space due to the long-term investment horizon, the whole idea of short-term quarterly earnings is probably the number one enemy of sustainable investing”.