David Gillette of Morningstar Addressed the AIM Students This Week on the Topic of ESG Investing
 |
| Dr. David Krause and David Gillette |
On Wednesday, September 14th,
the AIM students heard a presentation about ESG investing from David Gillette, Regional
Sales Director Advisor Solutions, Morningstar.
ESG stands for environmental,
social and governance and there is some evidence that suggests that ESG criterion
factors, when integrated into investment analysis and portfolio construction,
may offer investors potential long-term performance advantages.
ESG has become
shorthand for investment methodologies that embrace ESG or sustainability
factors as a means of helping to identify companies with superior business
models.
According to Dr. David
Krause, AIM program director, “David Gillette did a fine job talking with our
students about Morningstar’s new ESG fund rating criterion. I believe that their
rating scores will put additional pressure on some asset managers to support
their claims that they invest in socially responsible companies. It was useful for our students to understand
that environmental, social and governance investing criteria can be quantified
and that there is growing pressure from institutional and retail investors to
own funds with high ratings.”
 |
| David Gillette of Morningstar |
Morningstar’s process,
which was unveiled in March, provides an ESG score on more than 20,000 mutual
funds and ETFs offered to North American and European investors.
Krause added, “This is an unprecedented
amount of information that Morningstar is providing to investors. Whether it is
TIAA, a community foundation or an individual investor, I feel that there will
be greater demand to invest in funds with acceptable ESG ratings.”
According to the latest
data from The Forum for Sustainable and Responsible Investment, there is nearly
$7 trillion investing in ESG strategies in the U.S., which is up from $4.3
trillion in 2014, and up from $202 billion in 2007.
While controversial within
the industry, it is clear that there is widespread and growing interest in
sustainable investing around the world. Interestingly, David Gillette presented
data that showed Millennials to be more concerned about ESG investing than
previous generations.
Dr. Krause concluded, “Investors
are more sophisticated and want to know that they are investing to generate
strong returns and to support best sustainability practices. By adding
Morningstar Direct to our toolkit in the AIM program, we now have the ability
to go beyond traditional financial research.”
