Ahead of the InvestorDaily ESG Summit 2023, platinum partner Pengana Capital Group’s executive director and head of responsible investing, Adam Myers, insisted that the onus is on investment teams to engage with companies with regards to their environmental, social, and governance (ESG) reporting.
“While engagement on ESG issues were unusual maybe five years ago, they are part and parcel of the investment process now,” he told InvestorDaily.
“Therefore, I think it is critical that managers don’t outsource engagement to different areas of their organisation. You shouldn’t have an ESG team engaging with companies separately on ESG issues. The engagement should take place within the investment team because it informs the investment process.”
Besides this, when engaging with companies on ESG investing, asset managers require clarity around their objectives and ensuring that the process is fit for purpose, Mr Myers suggested.
“While we aren’t all looking for the same thing and there’s no perfect product, we need the information to be able to assess the product,” he said.
“So, managers need to continually assess the company and provide the information to the end investor. The investor then needs to put in the effort to really understand what they’re investing in.”
Mr Myers’ comments preceded his session at the ESG Summit 2023, where he will help advisers understand the challenges in the ESG landscape, offer a longer-term perspective on the structural and regulatory tailwinds supporting ESG investments, and explain how to harness the opportunities through an authentic approach.
According to Mr Myers, increased regulation around ESG investing could be one of the key trends of 2023, which could push more companies to transition from an environment of opt-in disclosure to one where disclosure would be mandated, particularly around the environment.
“I also hope that we are going to see a continuation of regulators cracking down on greenwashing because this is important,” he said.
Reflecting on the tumultuous year ESG investing endured in 2022, Mr Myers said that investment vehicles at the greener end of the spectrum that were more sustainability oriented would have struggled.
However, he noted that assessing the performance of ESG investments is not straightforward because there is a tendency to group a broad array of strategies under a single umbrella.
“I think a lot of people might be disappointed because their expectations haven’t been met,” Mr Myers said.
“But our role is to educate investors and manage those expectations. We’ve also got to be able to align expectations with philosophies and processes.”
Mr Myers hinted that he was optimistic about future prospects, adding that investors are well-placed to thrive in 2023.
The good news, he added, is that investors would not have to adapt significantly to thrive. Instead, he advised them to work through the process.
“I think that there are so many opportunities for investors in this market,” he said.
“As long as you have a differentiated and authentic approach, there are opportunities across the spectrum. Nobody outperforms by doing the same thing.”
Speaking about Pengana Capital Group’s partnership with the ESG Summit, Mr Myers said the fund manager believes in the merits of responsible investing and seeks opportunities to grow participation in this space.
“The summit is a great platform to engage with advisers who are looking to improve their knowledge,” he said.
“I’d like advisers to walk away with a better understanding of the challenges, pathways, and potential solutions. ESG investing is not broken as critics claim. It’s misunderstood. This is a great opportunity to improve our understanding of this space.”
To hear Adam Myers address the mounting criticisms against ESG investing and offer investment approaches you could use to harness the opportunities in this space, come along to the ESG Summit 2023.
It will be held on 23 March at Aerial UTS Function Centre Sydney and 29 March at Grand Hyatt, Melbourne.