What began decades ago as a fringe notion of investing to make the world a better place has soared in popularity in recent years. To understand what’s meant by sustainable investing and the efforts to align one’s principles with their investment principal and financial goals, we turned to Steve Norcini, head of sustainable investing for Wilmington Trust, and manager of its ESG Equity Strategy.
This interview answers questions about how:
- Sustainable investors seek to maximize risk-adjusted returns through the implementation of ESG criteria, which tend to focus the analysis on long-term risks and opportunities
- Sustainable funds have done well since they came into prominence over the last several years, in particular, 2020, where ESG exposures added significantly to performance
- According to a 2019 Morningstar study, 41 of 56 indices studied outperformed their non-ESG equivalents since inception
- The attractive characteristics of ESG companies overall have room to run from a price appreciation standpoint
Please see important disclosures at the end of the article.
A strategy’s focus on ESG factors will cause it to sell or avoid certain stocks. Such stocks may subsequently perform better than stocks selected considering ESG factors.
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