Schroders

Schroders hopeful for sustainability improvements with Biden victory

The recent rollbacks could potentially result in US companies laxing on environmental practices.

Against the backdrop of Covid-19 and the US’ rollback of environmental regulation, investment in environmental, social and corporate governance (ESG) remains a wise choice, writes Sarah Brattan Hughes, Head of Sustainability, North America, Schroders.

“We have seen sustainable investing outperform going into the Covid-19 crisis, and throughout the crisis. The resilience of results supports our view that sustainable investing is a proxy for quality.”

The recent rollbacks could potentially result in US companies laxing on environmental practices. However, the focus on sustainability in other parts of the world will help keep up the sustainability standards globally, Hughes adds. 

“For example, the European Union has embarked on a sustainable finance plan and has a strong ambition to be a global leader of sustainable investing. It is a matter of time before ESG integration becomes a hygiene factor in investing; a base-line requirement for asset managers to incorporate into all investment processes.”

With additional corporate disclosures being mandated around the world, US companies will have to abide by such regulations if they want to be operating in regions outside of US, adds Hughes.

“With the US presidential elections fast approaching, should there be a shift in the White House, we’re hopeful for improvements in sustainability policies as US presidential candidate Joe Biden and his running mate Kamala Harris are both advocates of environmental and climate justice.”

ESG over the years

Hughes notes how sustainable investing has evolved over the years, starting in its simplest form in the 1990s as a process of exclusion of “taboo” industries, such as alcohol, tobacco and firearms. “Since then, sustainable investing has had huge shifts in methodology; it is now a process of inclusion rather than exclusion,” she writes.

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