Clearing Up the ABCs of ESG

Posted by Dana Funds Investment Team on May 7, 2020 5:33:28 PM

While ESG interest is undoubtedly on the rise, the category hasn’t reached its full growth potential. One issue potentially holding it back? Clarity.

An October 2019 report from the Institute of International Finance1 found that financial firms are using nearly 80 different terms to describe various forms of sustainable investing. As the report describes, this is creating confusion for would-be investors:

“At best, this confusion makes it hard to compare investment products and for clients to understand the differences in offerings,” the report states. “At worst, it facilitates greenwashing—intentionally misleading investors or giving them a false impression about how well their investments are aligned with their sustainability goals.”

Advisors who can provide clarity around terminology and the various types of ESG-related investment strategies could create a meaningful differentiator for their practices, and appeal to a growing cohort of investors who want to align their investments with their values.

Current inflows show how quickly that cohort is growing. As we reported in our last blog (Pandemic Could Accelerate ESG Interest), inflows into such funds quadrupled to $20.6 billion in 20192, and got off to a hot start in 2020 with $10.5 billion of inflows in the first quarter3.

To help advisors walk their clients through the different terminology and get clarity on what, specifically, their clients want from ESG strategies, we have provided a quick, introductory primer that clears up some of the verbiage.

In this free guidebook, Everything You Want to Know About ESG Investing, we explain the differences between some of the most popular terms, the objectives and perspectives of different strategies, and address some of the most frequently asked questions about ESG strategies. We hope it provides your clients with more clarity around the issue. Available for download below.

 

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1https://www.iif.com/Publications/ID/3633/The-Case-for-Simplifying-Sustainable-Investment-Terminology

2https://www.morningstar.com/articles/961765/sustainable-fund-flows-in-2019-smash-previous-records

3https://www.morningstar.com/articles/977328/despite-the-downturn-us-sustainable-funds-notch-a-record-quarter-for-flows

By clicking the links above, you will be redirected to websites maintained by third parties.

Dana Large Cap Equity Fund top-ten holdings as of March 31, 2020: Microsoft Corp (2.70%), Apple, Inc. (2.66%), Intel Corp (2.43%), Amazon.com, Inc. (2.34%), Alphabet Inc. Class A (2.32%), LAM Research Corp. (2.28%), Walmart, Inc. (2.27%), Merck & Co, Inc. (2.20%), T-Mobile, Inc. (2.15%), Visa, Inc. (2.15%)

Dana Small Cap Equity Fund top-ten holdings as of March 31, 2020: Five9, Inc. (2.52%), Southwest Gas Corp (2.43%), Horizon Therapeutics (2.25%), Emergent BioSolutions, Inc. (2.24%), Qualys, Inc. (2.22%), Coherus BioSciences, Inc. (2.19%), Rapid7, Inc. (2.17%), BioTelemetry, Inc. (2.13%), Repligen Corp (2.12%), Chesapeake Utilities Corp (2.10%)

Dana Epiphany ESG Equity Fund top-ten holdings as of March 31, 2020: Microsoft Corp (2.72%), Apple, Inc. (2.68%), Alphabet, Inc. Class C (2.67%), Amazon.Com, Inc. (2.43%), Intel Corp (2.23%), General Mills, Inc (2.22%) LAM Research Corp (2.16%), Hill-Rom Holdings, Inc. (2.12), Fidelity National Information Services, Inc. (2.10%), Pepsico, Inc. (2.07%)


The Dana Funds are distributed by Ultimus Fund Distributors, LLC. There is no affiliation between Ultimus Fund Distributors, LLC. and the firms referenced in this blog post.