PLANSPONSOR - December 2022-February 2023 - 30

Exploring ESG Investing
Conference Coverage
Political Agenda
Or Economic
Factor?
" Is ESG investing, at its core, a matter of
politics or of economics? " This is a question
many plan sponsors-recently given
more latitude to invest with environmental,
social and governance factors in
mind-may be pondering, and wondering
how the ultimate answer, and to whatever
degree that interpretation prevails, will
affect choices they make today.
A panel of experts, co-hosted by
PLANSPONSOR, largely agreed as to
what ESG investment is in practice: a risk
strategy that considers factors defined as
environmental, social or governance;
it
is one more lens through which to view
a potential investment. For fiduciaries or
investors, its role should be to guide investment
decisions rather than dictate them.
" It's about additional data to make
said
better
investment
decisions, "
Timothy Calkins, a co-chief investment
officer at Nottingham Advisors.
At the same time, sometimes the data
could be more dependable. Analyses of
ESG funds can differ, resulting in inconsistent
ratings for the same investment.
Jeff Mindlin,
chief
investment
officer at Arizona State University Enterprise
Partners, noted that seeing a range
of ratings for the same product makes
investing more complicated and that some
companies have better access than others
to data about the products they rate.
Even with the same data, Calkins
said, different analysts will analyze a
fund differently based on how each
weights the various risk factors. He
said he doubts ESG ratings will ever be
standardized because ESG investment
is value-weighted. The strategy's more
subjective nature will, thus, produce
varied findings. He recommends that
an investor " find the agency where you
30 PLANSPONSOR.COM December 2022 - February 2023
30 PLANSPONSOR.COM December 2022 - February 2023
... the governance portion of ESG
may be the most important of
the three, as it speaks directly to
management and corruption: A failure
to consider governance issues when
making an investment might be a
breach of fiduciary duty in itself.
like the process the best, and then use
its ratings " rather than compare ratings
from multiple analysts, which each use
their own criteria.
Calkins suggested, for example,
that the governance portion of ESG may
be the most important of the three, as
it speaks directly to management and
corruption: A failure to consider governance
issues when making an investment
might be a breach of fiduciary duty
in itself. However, not all ESG rating
services may share the view that governance
should be weighted more than
environmental or social factors, he said.
ESG vs. Divestment
ESG as a philosophy of risk management is
in contrast to what Calkins calls the " divestment
approach, " or intentionally selling
out of or avoiding entire market sectors for
reasons related to an investor's political and
ethical views. Though Calkins sometimes
works with mission-driven clients that
make exclusion and divestment requests,
this is not what ESG is, strictly speaking,
as ESG-informed investment strategies do
not normally exclude profitable fossil fuel
companies, he said.
Mindlin said he tries " to avoid
divestment as a strategy. " Viewing ESG
principles as providing additional information,
however, can lead to greater insight
into how to capitalize on climate transition
planning and the growing renewables
sector, for instance. ESG investment
principles may be used to reduce risk but
not at
the expense of reduced returns,
which, on the other hand, an investor
favoring an exclusionary strategy may be
more tolerant of, he said.
ESG and Politics
The panelists did acknowledge that
political values often inform how ESG
strategy is executed.
Calkins said some of his clients based
in Rust Belt states have been skeptical
of ESG. If you frame ESG as a political
agenda, it can seem like an attack on someone's
political identity, he said. When asked
if liberal-minded investors are more open
to ESG than are conservative ones, Calkins
responded that it is " certainly an easier
conversation, " and there is not the " same
potential pushback. "
He lamented that " politics is trying to
get ESG to pick a side, " but making ESG
a political issue will make it only harder
to acquire the data investors need to make
decisions. Investors do not " want to trade
off performance for social good, but it's
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PLANSPONSOR - December 2022-February 2023

Table of Contents for the Digital Edition of PLANSPONSOR - December 2022-February 2023

INSIGHTS
RULES & REGULATIONS
PARTICIPANT ANALYSIS
UPFRONT
Risk Protection
Benchmarking Beyond Fees
Exploring ESG Investing
In Case of Emergency
Employee-Owned
FIDUCIARY FORUM
INSIDE ANGLE
PLAN PROFILE
PLANSPONSOR - December 2022-February 2023 - Cover1
PLANSPONSOR - December 2022-February 2023 - Cover2
PLANSPONSOR - December 2022-February 2023 - 1
PLANSPONSOR - December 2022-February 2023 - INSIGHTS
PLANSPONSOR - December 2022-February 2023 - 3
PLANSPONSOR - December 2022-February 2023 - RULES & REGULATIONS
PLANSPONSOR - December 2022-February 2023 - 5
PLANSPONSOR - December 2022-February 2023 - 6
PLANSPONSOR - December 2022-February 2023 - PARTICIPANT ANALYSIS
PLANSPONSOR - December 2022-February 2023 - UPFRONT
PLANSPONSOR - December 2022-February 2023 - 9
PLANSPONSOR - December 2022-February 2023 - 10
PLANSPONSOR - December 2022-February 2023 - 11
PLANSPONSOR - December 2022-February 2023 - 12
PLANSPONSOR - December 2022-February 2023 - 13
PLANSPONSOR - December 2022-February 2023 - Risk Protection
PLANSPONSOR - December 2022-February 2023 - 15
PLANSPONSOR - December 2022-February 2023 - 16
PLANSPONSOR - December 2022-February 2023 - 17
PLANSPONSOR - December 2022-February 2023 - Benchmarking Beyond Fees
PLANSPONSOR - December 2022-February 2023 - 19
PLANSPONSOR - December 2022-February 2023 - 20
PLANSPONSOR - December 2022-February 2023 - 21
PLANSPONSOR - December 2022-February 2023 - 22
PLANSPONSOR - December 2022-February 2023 - 23
PLANSPONSOR - December 2022-February 2023 - 24
PLANSPONSOR - December 2022-February 2023 - 25
PLANSPONSOR - December 2022-February 2023 - 26
PLANSPONSOR - December 2022-February 2023 - 27
PLANSPONSOR - December 2022-February 2023 - Exploring ESG Investing
PLANSPONSOR - December 2022-February 2023 - 29
PLANSPONSOR - December 2022-February 2023 - 30
PLANSPONSOR - December 2022-February 2023 - 31
PLANSPONSOR - December 2022-February 2023 - 32
PLANSPONSOR - December 2022-February 2023 - 33
PLANSPONSOR - December 2022-February 2023 - In Case of Emergency
PLANSPONSOR - December 2022-February 2023 - 35
PLANSPONSOR - December 2022-February 2023 - Employee-Owned
PLANSPONSOR - December 2022-February 2023 - 37
PLANSPONSOR - December 2022-February 2023 - FIDUCIARY FORUM
PLANSPONSOR - December 2022-February 2023 - INSIDE ANGLE
PLANSPONSOR - December 2022-February 2023 - PLAN PROFILE
PLANSPONSOR - December 2022-February 2023 - Cover3
PLANSPONSOR - December 2022-February 2023 - Cover4
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