Investment
A $26 Billion Investor Says Her ESG Bets Outperformed in Selloff
(Bloomberg) — The chief investment officer of a $26 billion fund in Helsinki says the market crisis triggered by Covid-19 has revealed just how resilient ESG assets are.
Securities that meet environmental, social and governance standards have proved a better bet so far this year than those that don’t, according to Hanna Hiidenpalo, chief investment officer at Elo Mutual Pension Insurance Company.
“During the crisis, we discovered that the business models of responsible companies are often based on a more solid foundation, which is also reflected in better valuations,” she said.
Elo doesn’t break out ESG-specific returns. But Hiidenpalo said that “companies with high ESG-ratings have produced better returns,” particularly in the U.S. They’ve also seen their earnings estimates “lowered less than on average,” she said.
The fund’s experience over the past few months has made clear that there’s real financial value to be gained from adopting an ESG strategy, and Hiidenpalo said she now plans to make environmentally friendly strategies a bigger part of her asset allocation.
Elo already wants its portfolio to have a “measurable positive impact” on the environment/society by 2025, and plans to apply the goal to more than half its direct equity and credit investments.
Overall, the investment horizon remains largely unchanged, with low interest rates here to stay; that means “there are very few opportunities to earn an investment return outside corporate risk,” Hiidenpalo said.
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