ClearBridge Investments has released its annual impact report, detailing how companies can improve and drive change in the environmental, social and governance practice of public companies.
This could be done via direct discussions with senior management and proxy voting on areas such as diversity and inclusion, sustainable infrastructure and fossil fuels. ClearBridge also identified specific ESG considerations for sector and sub-sectors which informed stock selection.
It also highlighted a study by the New York University Stern Center which found strong financial performance was positively correlated with ESG and that improved performance was shown over the longer term when firms incorporated ESG.
Terrence Murphy, chief executive of ClearBridge, said: “"In a year like no other, the global pandemic starkly highlighted the social and economic inequalities in our society. At the same time, it reinforced the value of our decades-long efforts to prioritise ESG factors in our investment approach”.
In the infrastructure space, Shane Hurst, portfolio manager of global infrastructure strategies, said ESG was “vital” for the asset class and there had been a tilt towards managing stakeholder interests.
“ESG has always been vital for infrastructure as an asset class. The need to lower carbon emissions is not going away, nor is the importance of upgrading and building new infrastructure to achieve lower emissions targets. And part of the world’s response to the pandemic, the urgency of balancing stakeholder’s interests in business operations is a positive for the infrastructure sector,” he said.
“Partly, this is because infrastructure companies are well-positioned to manage a balance of stakeholder and shareholder interests that is a key tenet of the corporate response to the pandemic. The tilt toward managing stakeholder interests has been accentuated by the COVID-19 crisis, as companies have found themselves needing to help employees, customers and the general public during these difficult times.”