FE Investments, Episode 2: Why every fund manager must now incorporate ESG

In episode 2 of the aptly titled Another Adviser Podcast with FE Investments, Rob Gleeson, CFA is joined by colleague Nimisha Sodha as they discuss ESG and the responsible investment movement from an adviser perspective. The wide-ranging conversation focused on ESG fundamentals, what FE Investments itself looks for, and issues around engagement. Head of ESG Nimisha Sodha remarked on how quickly responsible investing has become mainstream – “from zero to one hundred in the past year and a half” – which in itself has created some confusion among advisers around the terminology used. “You hear people say ‘ESG integration’, ‘ESG incorporation’, ‘ESG embedded’, ‘responsible investing’, ‘sustainable investing’, ‘impact investing’, ‘ethical investing’, ‘values-based investing’ and more; its endless,” she said. This is where a broad spectrum of capital – such as that suggested by Octo Member’s own Responsible Investment Forum – becomes a norm within investment management circles, asking investors to chose where they sit within a continuum of responsible investing. For Rob Gleeson, FE Investment’s CIO, the two things that really matter to the retail investor and their adviser are sustainability risk and responsible investing. While ESG itself may or may not necessarily deliver tangible benefits, Nimisha asserted that it should be a core part of any portfolio. Still, from analysing funds on this basis for the past 18 months, Rob stressed advisers would be surprised at how many funds fail to meet the mark in terms of having ESG embedded in their risk management. “ESG is just part of doing your job – but where are you using ESG to actively provide a different outcome to how you otherwise would do?,” he said. He added: “There’s such a wide variety of ways you can incorporate ESG into a fund and actually they are not all the same”.