Responsible investing and Rosenberg equities
Our decision to fully integrate ESG (environmental, social and governance) across our strategies comes from a number of beliefs. While ESG investing is not new, the data is becoming more widely available to data-driven managers such as Rosenberg Equities. This growing body of data helps inform our core beliefs that:
- ESG information is economic in nature: Companies that use their resources wisely should have an economic advantage over those that do not.
- ESG information is complementary to traditional fundamental data: ESG data is currently not well represented in traditional financial data and tends to be longer horizon in nature, giving us a window through which we can view a company’s long-term sustainability and a more holistic view.
- Based on this, ESG information may change our opinion of the fundamental ‘worth’ of a stock.
What is the process within the platform for integrating ESG?
We have a strong relationship with the Responsible Investment (RI) team and our investment approach enables us to systematically incorporate ESG data directly and efficiently into our models. We take data from a variety of external vendors in addition to the corporate scoring framework that is maintained by the RI team. Once the data is in our system we can work with it in a variety of ways, from research and analysis to portfolio construction and reporting. For example, we add ESG scores and key performance indicator (KPI) targets alongside our traditional alpha and risk measures. In this way, we guarantee that ESG will be ‘part of the dialogue’ when it comes to driving portfolio positioning and real investment outcomes. That said, we are unwilling to sacrifice the traditional risk and reward profiles of our strategies when integrating ESG, so when faced with two stocks of identical ESG scores, our optimiser would always favour the one with the highest alpha, all other considerations being equal.
How has ESG evolved within the platform?
Rosenberg Equities has been running what used to be called Socially Responsible Investing (SRI) portfolios since the mid-1990’s for our clients. The focus of these strategies was largely exclusionary. In 2014 we launched our first truly ESG-integrated pooled fund in Australia and then launched the same strategy in the European market. We are pleased to announce that we have now integrated ESG in all of Rosenberg’s portfolios.1
1 ESG data is not available for the entire Rosenberg Equities universe.
In this video, Heidi Ridley, CEO of Rosenberg Equities, explains our motivation to integrate ESG across our investment strategies.
Data privacy during COVID-19: Trust is hard earned – but easily lost
The coronavirus pandemic has prompted millions of people to work from home, do their shopping online, and communicate with friends and family through websites and apps that they hadn’t used before ...
How Impact Investing feeds the engine for the sustainability era
Impact investment is really all about seeking financial returns by tapping into one of the grand themes of this century – it just happens to be a theme defined by our transition to a more sust ...
Why gender equality and diversity could be a corporate requirement in future
It is largely accepted that gender diversity in business equates to good corporate governance – but we believe that for investors, it is fast becoming a corporate requirement