Why ESG should be the norm for funds

Alex Duffy, manager of the Fidelity Global Emerging Markets Fund, has said ESG issues will cease to be a talking point in five years as funds adopt an ESG approach as normal process.

The manager, who had run the fund since 2013, said it would not ‘make sense’ if funds were invested in businesses that were unsustainable, regarding of whether they were an ESG fund or not.

“In five years’ time we won’t be talking about ESG, it will be totally redundant, possibly even less than five years. If someone is telling you they are an unsustainable investor then that doesn’t make any sense.”

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Duffy said ESG was an ‘integral part’ of the GEM fund’s company selection but he said it did not have ESG in its title as this gave a ‘false impression’ of what the fund did.

“If you name a fund ESG there is a particular connotation of what you expect it to invest in and implies there is a difference between ESG investing and ordinary investing which I don’t think is the case,” he said.

“It is easy to say your fund is ESG but what you do and how you do it is more important.”

He said Fidelity took the decision to actively work with companies to improve their businesses rather than negatively screening them.

“We think it is better to engage with companies to help them change their behaviour for the better rather than to exclude them. We want to identify companies that meet the minimum threshold and encourage them to address those problems which will enhance their company and help them grow quicker.”

The Fidelity Global Emerging Markets Fund has returned 3.65 per cent over one year to 13 May, according to FE Analytics, versus losses of 0.95 per cent by the ACS Equity- Emerging Markets sector.

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Terribly socialist this ESG stuff. Where are the usual 'reds-under-the-beds' crowd? This fund is not toeing the party line!

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