Our conversation with Purpose Investments' CEO, Som Seif, on the surge in relevance and evolution of ESG (Environmental, Social, and Governance) ratings as a factor.
As a result of his company's research over the last 6 years, Seif says ESG has never truly been adopted as a core part of the investing process, and that it (E, S and G factors) should objectively be considered as integral to investing, as fundamental as quality, momentum, value, or any other key factors.
"This represents a change in mindset," says Seif. The idea of ESG has never really taken hold of the market, often because of values mismatches of investors, where investors didn't agree with some values based decision, or didn't care. Some fund companies launched ESG funds as something off the side of their desks, but it wasn't what they believed in as far as their core business.
We discuss some of the ways ESG should/can instead be part of a holistic fundamental investment decision making process, and can provide a measured, abstract and objective dimension to the analysis of stocks and other securities in the investment decision making process. Purpose Investments is pioneering the implementation of this new mindset into all of their core investment processes as part of its fundamental approach.