Institutional investors have at least $4 trillion invested in environmental, social and governance strategies, which “really represents a tremendous change,” said Christopher Geczy, speaking Tuesday at Pensions & Investments' Global Future of Retirement conference in New York.
Mr. Geczy — a Wharton School finance professor who moderated a panel titled “Does ESG Have a Place within Defined Benefit and Defined Contribution Plans?” — said he has more students signed up for impact investing classes than for regular investing courses.
“ESG factors are increasingly becoming important in investment today,” agreed Robert Wilson, research analyst at MFS Investment Management. On the often-raised question of whether ESG decisions pit profit against altruism, “increasingly, these issues are not in conflict with each other,” Mr. Wilson said.
Ajit Singh, chief risk officer for the United Nations investment management division, which manages a $54 billion pension fund, said while his division already has a risk budget, “we want to create an ESG budget.”
“The goal is to have a tool to prevent an event that could cause risk,” said Mauro Bichelli, general manager of Italy's Fondapi Pension Fund. Mr. Bichelli said his fund uses an environmental and governance benchmark for its ESG assets, which represent 4% of the portfolio. “I think the most important thing is, you want to invest in all the sectors,” Mr. Bichelli said.