PLANADVISER - May/June 2021 - 35

products focused on sustainability and corporate social
responsibility, along with using such labels. A decade ago,
the general public had much less knowledge of this topic,
though it was certainly out there in some circles. Today, we
don't have to explain everything we're talking about and
start the conversation from scratch.
PA: Do you think the U.S. investment world is catching up to
this point of view?
Young: Yes. And there's no time to waste when it comes to
addressing the challenge of a warming climate. From the
public policy perspective, it's gratifying to see that global,
coordinated governmental action is on the table, in a way
we haven't seen before. We'll have to wait and see how
effective the [Paris Agreement] ends up being, but there is
clearly more interest in this area today, [versus] when we
put together our mission statement and goals.
Looking at the U.S., in particular, so much power is
wielded through institutional asset owners and their
advisers. Advisers should understand that they really can
make a big difference in addressing climate change and
social justice issues. Our perspective is that taking action
now is critical.
PA: How else has ESG investing evolved?
Young: When we first were putting together our early ESG
trends reports-to simply look at the size of this field-much
of our work was focused on equities. In the last six or seven
years, though, more and more research is coming out to apply
ESG criteria across all asset classes. This is a great thing, and
I'm talking about more than just green bonds. We're seeing
the development and application of sophisticated ESG criteria
and investment methodologies. This includes in private
equity, in hedge funds and in other alternative vehicles.
For the investment management and advisory community,
the step we're taking now is to take the huge amount
of data available and distill it into information that's useful
in our investment process. The emerging question is, how
do we integrate and utilize this ESG data? There are really
amazing opportunities at hand, and I believe our ambitious
vision and mission is within reach. Five or 10 years ago, all
of this felt much more abstract and aspirational.
PA: Climate action is clearly pressing, and there are other
areas where there's no time to waste, namely the promotion
of racial equity and gender equity in the workplace. Do you
see more rapid progress being made on these issues today?
Young: My personal impression is that the rate of adoption
of ESG principles, both as a means to improve investment
outcomes and to promote more equitable corporate policies,
is accelerating.
Given everything we have seen play out in the last several
years, the climate and issues of inequality are a focus for
more and more people, across more and more parts of their
lives. Ultimately, the barrier to entry for this entire conversation
has gone down, and that's great. Today, more investors
know that ESG issues include-along with climate change-
" ... so much
power is
wielded
through
institutional
asset owners
and their
advisers. "
systemic
racial
inequality,
human rights, equal employment
and diversity, sustainable
agriculture,
executive
pay and much more. During
the pandemic, more people
have spoken out on the
interrelated coronavirus and
social injustice crises.
Our members are
successfully challenging the
assumption that short-term
shareholder return is the key
relevant outcome for companies,
and they're advocating
to focus on a broader group
of stakeholders.
PA: Let's talk about the importance of adviser training and
education on this topic.
Young: Over the course of many years, we at U.S. SIF realized
that, first, we had a serious challenge with financial literacy
in the U.S., and secondarily, we had a lot of member organizations
that didn't know how to begin the discussion about
ESG with their clients. So, we saw a dual role for U.S. SIF:
We needed to create simple tools and a framework that the
average person could understand and utilize while learning
about ESG. This became our free online course for novice
individual investors. Today, there's a course on our website
that can be a great resource for advisers to share with their
clients, if they'd like a way to kick-start this conversation.
The rest of what we do is catering to financial professionals.
For the adviser, the " Fundamentals " course demonstrates
how the ESG discovery process is important. We
explain how you can ask your clients where they might
spend philanthropic dollars and how this might uncover the
social issues most interesting to them. Perhaps they support
a food bank or are drawn to issues about affordable housing
or health care in their community. The adviser can help the
client see the different avenues and areas to care about. At
the same time, our course work helps advisers understand
how to implement and pursue ESG goals in today's market.
PA: And what does it take to earn the CSRIC designation?
Young: I'd compare it to a graduate level course. It's meant
to be comprehensive, looking back at the history of ESG, and
then diving into the modern era, which started with the
global divestment from South Africa during the Apartheid
era to the ESG disclosure mandate from the U.S. Securities
and Exchange Commission [SEC].
We discuss the ERISA [Employee Retirement Income
Security Act] fiduciary standard and the considerations
about portfolio construction in the retirement planning
context, as well as how to analyze and integrate ESG data
sources and to understand the different rating methodologies
that firms use. When you finish, you'll have an expertise
that will be really useful as this marketplace develops.
planadviser.com May-June 2021 | 35
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PLANADVISER - May/June 2021

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