The Metrics that Matter: A 'Mainstream' Approach to ESG

Goldman Sachs Exchanges

Julia McGonagle

Business

4.4 • 1K Ratings

🗓️ 8 May 2017

⏱️ 26 minutes

🔗️ Recording | iTunes | RSS

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Summary

Environmental, social and governance metrics have matured to the point where they can help mainstream investors beat their benchmarks, says Goldman Sachs Research's Derek Bingham. As a member of the GS SUSTAIN team, which seeks to identify companies with long-term growth potential, Bingham and his colleagues study which sustainability measures most closely align with returns over time. He shares the team's findings and explains why he sees ESG research as integral to a "holistic" take on stock selection. This podcast was recorded on May 2, 2017. All price references and market forecasts correspond to the date of this recording. This podcast should not be copied, distributed, published or reproduced, in whole or in part. The information contained in this podcast does not constitute research or a recommendation from any Goldman Sachs entity to the listener. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty, as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. The views expressed in this podcast are not necessarily those of Goldman Sachs, and Goldman Sachs is not providing any financial, economic, legal, accounting or tax advice or recommendations in this podcast. In addition, the receipt of this podcast by any listener is not to be taken as constituting the giving of investment advice by Goldman Sachs to that listener, nor to constitute such person a client of any Goldman Sachs entity. Copyright 2017 Goldman Sachs. All rights reserved.

Transcript

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0:00.0	This is Exchanges at Goldman Sachs where we discuss developments currently shaping markets, industries in the global economy.
0:15.0	I'm Jake Seward, Global Head of Corporate Communications here at the firm.
0:19.0	Environmental, social, and governance investing goes by many names.
0:23.0	Soci responsible investing, impact investing, or simply ESG, but by most any measure
0:28.9	it's exploding in interest and demand.
0:31.2	My guest today, Derek Bingham, leads the America's arm of the
0:34.4	sustained team in Goldman Sachs research which focuses on finding long-term
0:38.9	value for investors. He's here to discuss how his team's approach to ESG differs from what's been the typical model in the space.
0:46.0	Derek, welcome to the program.
0:48.0	Thanks for having me.
0:49.0	Derek, you've written a report that outlines how you see ESG in terms of its impact on the way in which
0:56.3	portfolio managers should assess investing. Where are we today in terms of ESG
1:01.1	being an investable theme for a mainstream investor, that is what kind of data is available,
1:07.0	what are the tools out there that put that data to use, and how to returns compare against more common benchmarks.
1:15.0	The root of ESG investing came from ESG specialists, folks that wanted to invest behind a certain set of values, wanted to focus on the
1:27.9	ESG aspects of their companies, and as a result of that emphasis, rightly or wrongly, got a reputation perhaps for underperformance or at least of putting returns secondary to ESG considerations.
1:43.0	Now this has evolved over time meaningfully,
1:47.0	and it started to creep its way into the mainstream,
1:50.0	and when I say mainstream, I just mean investment managers who kind of historically weren't spending a lot of time on ESG topics in a lot of different ways.
1:58.7	So that would include taking third party ratings on ESG into consideration over their companies.
2:06.8	This is basically using outsourced experts to do it for you, to starting to develop in-house
2:12.2	expertise and we're seeing more and more. to starting to develop in-house expertise,
	...

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