Our Approach to ESG Investing

The number of institutional investors incorporating environmental, social, and governance (ESG) factors into investment decisions continues to rise—and Callan is at the forefront of the research and education concerning ESG investing.

Explore the key findings of our 2019 ESG Survey here.

It starts with collaboration and customization.

Our approach to ESG investing is consistent with our broader consulting philosophy: Customized solutions are required to meet each institutional investor’s needs. We work with you to understand your investment objectives and to establish a sound fiduciary process for decision-making. In our experience, the definitions of ESG vary widely across organizations, depending on values and priorities. Implementation can take many forms, including factor integration into investment analysis, negative screens, themed strategies, carbon footprinting, and shareholder activism, which makes customization essential. Recent client projects related to ESG include:

  • Hosting workshops and webinars for investment managers and plan sponsors
  • Creating and monitoring an emerging market permissible country screen
  • Conducting manager searches in active and passive equities
  • Leading discussions on carbon footprinting and fossil fuel divestment, firearms/ammunition, tobacco, and Sudan.

It continues with education and research.

Our ongoing research and education focuses on the impact on returns and risk mitigation from incorporating ESG factors. Specifically, we:

  • Integrated MSCI’s ESG Ratings scores into our in-house database to enable security-, portfolio-, and manager-level assessment of total scores and sub-scores (E, S, and G separately).
  • Collect and analyze data on managers’ usage of ESG and SRI factors in the investment process and hold face-to-face manager meetings to understand the nuanced application of ESG integration into investment processes.
  • Participate in industry events (e.g., CFA Institute, Institutional Investor, Ceres, Investor Network of Climate Risk, etc.) to contribute to ongoing education and ensure we are on top of the latest trends.

Also, our ESG Committee meets regularly to address relevant new issues in the space and communicates industry findings with clients and colleagues.

image

Our Latest Insights on ESG Investing

Callan regularly publishes blogs, white papers, and surveys on ESG, featuring the insights of Callan experts. Please take a few minutes to explore our latest publications.

42%

U.S. Institutional Investors

Incorporated ESG factors in 2019

22%

U.S. Institutional Investors

Incorporated ESG factors in 2013

51%

U.S. Institutional Investors

Consider ESG with Every Investment Manager/Selection

Explore Our 2019 ESG Survey Results

Our 7th annual ESG Survey of 89 U.S. institutional investors shows a continued commitment to implementation—with 42% incorporating environmental, social, and governance (ESG) factors into investment decisions in 2019.

Since our first ESG Survey in 2013, trends seem clear: increasing adoption in the U.S., even as implementation, varies by investor. At the same time, the groundswell of research, data, and global investor collaboration is paving the way for fresh investors to consider how ESG might complement their investment decision-making framework, and for experienced ESG investors to go deeper across their portfolio.

Read the survey here.

Callan ESG Committee

The Callan ESG Committee reviews all client projects that incorporate ESG into the investment framework. This group also creates solutions to issues facing our clients, and develops research to bring transparency and insight to the rapidly changing ESG landscape.

Would you like to talk to us? Call our San Francisco headquarters, 415-974-5060.