Purpose Investments has announced its “defining” and “unique” new ESG framework, which it believes will help investors outperform.
The result of years of testing, the firm now has a robust process designed to clean data and apply it in a more nuanced way across the full range of industry sectors. With improved data availability, it believes it can now incorporate ESG factors across the board to create both social benefits and added value.
In a release, Purpose said that, historically, approaches to sustainable investing simply narrowed the scope of potential investments and traded values for performance. Investors were forced to accept weaker returns in exchange for responsibility.
By create a strategic, integrated approach, and by fully integrating ESG factors in a unique way, they believe they can maximize value—and client returns—while at the same time focusing on the impact of investing responsibly.
Som Seif, CEO and founder, said: “We don't think our clients should have to choose between long-term success and investing in companies they can believe in. We also didn’t want to rush to market, like many firms have, and treat ESG as an afterthought.
“Our core values have always driven everything we design. Just as value, quality and risk-management are core to what we do, since day one we’ve been planning, researching and developing an ESG approach that would be as ground-breaking as everything else we’ve done.”
Research now shows that when companies proactively manage environmental and social impact with strong governance models, over time, they can outperform those that do not. When Purpose first launched in 2013, the necessary data and research to create a quality, effective ESG approach—with the confidence to avoid a negative impact on returns— simply wasn’t available.
Each of Purpose’s investment strategies has its own approach. Quantitative strategies incorporate ESG into broader factor models alongside existing core factors such as value, quality and momentum. Discretionary strategies integrate ESG into existing investment frameworks, pushing scope further beyond the data found in a company’s financial statements.
Many of Purpose’s core funds, including Purpose Core Dividend Fund (PDF), Purpose Global Bond Fund (BND) and Purpose Marijuana Opportunities Fund (MJJ) have already incorporated ESG factors into their investment approach.
The majority of Purpose funds, equalling approximately 75% of total assets under management, are already operating with the new ESG framework. The goal is to have it integrated across as much of the fund line-up as possible by the end of 2019.
“ESG was a defining project for us. We would be one of the first with this approach and we took the time to get it right,” Seif said. “It deserved our care and attention—our goal was to embed responsible investing in a way no other firm ever had before. So that’s precisely what we did.”
Greg Taylor, CIO, added: “ESG is not becoming the sole determinant of investment decisions, but rather part of Purpose’s investing DNA. Investors shouldn’t expect dramatic shifts in short-term performance, but our target is for a positive trend to emerge over time.
“More information makes for a more robust investment process, better security selection and, ultimately, higher quality long-term returns. More data gives us the ability to make better decisions.”
“Since our beginning, we've proactively added modern, trail-blazing approaches to reflect our values and ensure that our core practices measure up to the bar we've set for ourselves,” Seif concluded.
“Investors shouldn’t have to choose between superior returns and doing the right thing. Today our daily mission has grown to include the proven, high-quality ESG principles we'd always dreamed of bringing to market.”
ESG scores for each Purpose fund with available data are now displayed on the company website as a part of its commitment to transparency.
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