(September 2020)
Any advisor who has been paying any attention to ESG lately will know the sector has been doing well. This is true not only on a returns basis, but also in terms of AUM growth. While many articles have covered this, one thing that is rarely mentioned is the real reason why. The true crux of the rise of ESG during COVID is the fact that at its heart, ESG is about risk mitigation. In particular, protection from environment, social, and governance risks. Therefore, the underlying mindset of ESG is closely aligned with the conservative and protectionist pandemic-era mindset that has prevailed over the last six months.
(New York)
FINSUM + Magnifi: COVID has done an excellent job highlighting big tail risks, and that is really what ESG is about at the institutional level (vis-à-vis the retail level, where ESG can be more emotionally/ethically driven). With that in mind, it is easy to see why it has done so well.
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