This was our first foray into highlighting this style of
investing at the conference since before the financial
crisis, so we really didn’t know what to expect in terms
of attendance and interest, although we did have a
general inkling.
The session was well attended, and when I polled the audience
to see how many people were familiar with this style of
investing, an overwhelming number of hands went up.
This seems to be emblematic of what is happening across
the asset management industry as a whole. It now appears
a growing number of clients, advisors, and asset managers
are incorporating ESG into their investment schemes. Let’s
take a look at how far ESG has come over the last decade.
The Proof Is in the Numbers
With the growing interest in ESG, particularly in the last
five years, asset managers that specialize in this type of
investing have reaped the benefits, as Figure 1 shows. Three
of the industry’s leading SRI/ESG managers—Calvert,
Parnassus, and Pax World—have seen tremendous growth
over the last decade, with total assets increasing by almost
240 percent. Conversely, the asset management industry
as a whole grew only 180 percent over the same period.
In fact, the top five managers in the industry based on assets
under management—Vanguard, Fidelity, American Funds,
PIMCO, and Franklin Templeton Investments—have had
collective growth of only 173 percent over the last decade.
Here at Commonwealth, we’ve seen a similar trend. As
the primary analyst covering SRI/ESG strategies, I can
attest to the fact that advisor and client interest in the
space has increased significantly over the past five years,
particularly in the last year or so. If that sounds overly
anecdotal, see Figure 2, which illustrates in-house interest
at Commonwealth. The chart shows total assets under
management for the PPS Select SRI portfolios since inception,
which, as you can see, have grown steadily over the years.
Socially Responsible Investing: A Growing Trend
PETER ESSELE, CFA®
For the first time in a number of years, Commonwealth offered a session dedicated
to socially responsible investing (SRI)—commonly known in the investing
community as ESG (environmental, social, and governance) investing—at our
2013 National Conference in Phoenix.
Wealth Management
/ Investments & Research
16
For Advisor Use Only
January/February
2014
10/1/03
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25
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5
0
Billions ($)
SRI Industry Assets
(Calvert, Parnassus, Pax World)
Source: Commonwealth, Morningstar
®
Direct
Figure 1. SRI Industry Growth
