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December 8, 2021

ESG and Your Portfolio 

Have you been inspired by the sustainability movement? Lots of consumers are trying to be more conscious in the products and services they choose. But figuring out which ones have the best environmental and social impact can be challenging. Your investments are no different. Fortunately, the industry has been listening to the needs of investors, resulting in the rise of ESG (environmental, social and governance) investing. So, if you’re looking to boost the positive outcomes of your investments, this blog will take you through the advantages of ESG investing and how to incorporate it into your investment portfolio.

 

Why choose ESG?

 

ESG investing is a process that incorporates environmental, social and governance factors, in addition to financial factors, to identify risks and opportunities that may not be captured using traditional analysis. This balance between global impacts and financial outcomes can provide numerous benefits to investors.

 

Align your investments to your values

 

One of the biggest draws for ESG investing is that it can help you align your investments with your values. For example, ESG screens can help you avoid companies that negatively impact the environment and society, and instead focus on those that uphold sustainable and ethical practices that are important to you. 

 

Enhance performance

 

There is often a link between a company’s commitment to ESG practices and its ability to provide better risk-adjusted returns (higher valuations or growth, and lower volatility). The chart below compares the past performance of an ESG index with its traditional counterparts, demonstrating you don’t need to sacrifice returns for your values.

Source: Morningstar Direct. As of October 31, 2021.

 

Make a difference in the world

 

As ESG investing has evolved, so too has its ability to enable positive change. Nowadays, investors can employ impact or thematic investing, which allows them to use their capital to drive positive environmental and social outcomes globally.

 

Growth Potential

 

The ability for ESG solutions to make a difference is also one of its biggest drivers. Due to investor demand, ESG funds gathered $21 billion in the first quarter of 2021—almost as much as they accrued in all of 2019 and 2020 combined—and its likely this trend will continue. There’s also the potential to get exposure to newer or growing market segments, like investing in the technology and infrastructure needed to help decarbonize our planet.

 

Now that we’ve covered the importance and advantages of ESG investing, let’s look at how you can make an impact on your portfolio.

 

Ways to include ESG in your portfolio

 

There’s a growing number of ESG solutions on the market, making it easier to find the right fit for your financial goals and your values. These can include investment strategies that employ screens to eliminate companies with poor ESG ratings, or funds that focus on specific themes. To demonstrate, we’ll take you through CI Global Asset Management’s (CI GAM) ESG solutions.

 

CI GAM ESG and impact funds

 

 

 

Mosaic ESG ETF Portfolios

 

CI MSCI World Impact Fund

 

CI Global Climate Leaders fund

 

Objective

 

Combine the advantages of managed solutions (diversification, asset allocation and more) with the benefits of ESG screening for sustainable risk-adjusted returns.

 

 

Designed to provide long-term capital growth by investing in securities from around the world with strong environmental, social and governance performance, all in the convenience of an ETF.

 

A concentrated portfolio of companies that are enabling the decarbonization of our planet and have the potential to grow over the long term.

 

ESG strategy

 

Core investments in companies with high ESG ratings, complemented by investments focused on specific ESG themes.

 

Invests in four key themes contributing to positive environmental and social change:

  • Climate change
  • Natural capital
  • Basic needs
  • Empowerment

 

Invests in companies four structural climate change categories:

 

 

Socially responsible investing

 

The integration of ESG factors is not exclusive to our ESG lineup. Approximately 75% of our assets under management are covered by our formal Responsible Investing Policy. This policy assists our investment management teams in identifying material ESG and financial risks and opportunities for a more holistic view of the companies in which we invest.

 

CI GAM’s Responsible Investing Process

  • Step 1: In-house portfolio managers get continual access to third-party ESG data.
  • Step 2: Investment exclusions list provided to in-house portfolio managers and external sub-advisors on an ongoing basis.
  • Step 3: CI GAM’s ESG Team provides in-house portfolio managers with customized ESG screens of portfolios with flagged holdings.
  • Step 4: In-house portfolio managers review flagged holdings and document findings.
  • Step 5: Ongoing monitoring by CI GAM’s ESG Team.

Final steps

 

Congratulations, you are now fully equipped to start your sustainable investing journey! If you’d like to incorporate ESG into your portfolio, reach out to your financial advisor or visit ci.com to discover how you can use your capital to drive positive change.

IMPORTANT DISCLAIMERS

 

This document is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication.  Market conditions may change which may impact the information contained in this document. All charts and illustrations in this document are for illustrative purposes only. They are not intended to predict or project investment results. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.

 

CI Global Asset Management is a registered business name of CI Investments Inc. ©CI Investments Inc. 2021.  All rights reserved. 

 

Published December 8, 2021