ESG Influences on the Buy-Side
Panelists:
John Hoeppner, Head of U.S. Stewardship and Sustainable Investments, Legal & General
Investment Management America
John T. Oxtoby, Senior Vice President, Director of Environmental, Social and Governance
Investing, Ariel Investments
Moderator: Casey Nault, Senior Vice President, General Counsel and Chief ESG Officer,
Coeur Mining, Inc.
KEY TAKEAWAYS
- “We’re proud that we’ve helped 55 companies improve their ESG performance,” said Ariel’s
John Oxtoby – which included leveraging the Ariel network to help companies recruit diverse
directors, some of whom join corporate boards for the first time after extensive experience
on nonprofit boards. (FYI, Ariel was the first African-American-owned mutual fund company
at its launch in 1983.) In making proxy voting decisions, Ariel avoids screening out stocks
using third-party ESG ratings or internal hard-line ESG rules, such as board tenure or age
restrictions. “A negative will translate into our discount rate, but if there’s something we like
about a company, we can help it improve,” he said. ESG considerations are integrated into
Ariel’s investment process as part of its financial materiality assessment of a company’s risk
and opportunities. Both the ESG team and a given company’s primary financial analyst
participate in the assessment and corporate engagement. While Ariel tends to agree with
Bloomberg and MSCI data, Oxtoby is “optimistic” that they and other data providers will align
due to ongoing standard-setting discussions.
- John Hoeppner explained that Legal & General Investment Management (LGIM) is one of
Europe’s largest asset managers. Chicago-based LGIM America has $224 billion in assets
under management for institutional investors. “We buy from every ESG data provider on the
market, vet the data and build it into how we make proxy voting decisions and assess risk,”
Hoeppner said. LGIM’s “house view” is transparent, due in part to its Insights ESG white
papers. Assessments include looking for companies that are “way off average,” such as if
they have uncapped executive compensation or an audit firm in place for 20+ years. LGIM is
a member of the Human Capital Management Coalition and Hoeppner expects HCM
legislation to be proposed this year. “Research shows that diverse groups are more creative
and make better decisions, but diversity is just one ESG measure,” he said. “We also talk
with company CEOs about the ESG premium – you’re leaving money on the table if you
don’t actively manage ESG. This is not the media’s view that ESG is to promote a social
agenda or change the world.”