Show Transcript
Investors doubled down on sustainable investing in 2020, with the dialogue in the corporate world moving from “do no harm” to “invest with purpose.” Kim Parlee talks with Priti Shokeen, Head of ESG Research and Engagement, TD Asset Management, about TDAM’s ESG strategy and the launch of TD’s new ESG ETFs.
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[MUSIC PLAYING]
- 2020 was a historic year in a multitude of ways. It really forced a focus on systemic inequalities and the pressing issue of climate change, which in turn from an investing standpoint, put a growing spotlight on the role of capital markets on environmental, social, and governance, also known as ESG investing. Joining me now is Priti Shokeen. She's head of ESG Research and Engagement with TD Asset Management to talk about all the great work they're doing. Priti, thanks so much for joining us.
I know ESG has been around for a number of years. And you've got a recent report that just came out you know back in 2020 the dialogue in the corporate world really moved from I call passive to active, from do no harm to invest with purpose. What do you think that change really means?
- Yeah, thanks, Kim. And good to be here with you at MoneyTalk. I think the primary reason for the shift is changing societal expectations, and sort of a growing appetite to invest with a purpose. So at TD Asset Management, for example, we are seeing client demand, both on individual investor level, who are looking to align their investments with their personal values, and new generation and old questioning the status quo of things, whether it be from a climate perspective or social inequalities, and also from institutional investment side. I think a number of our clients are acknowledging that they have a role to play in shifting our current production systems or patterns to a more sustainable one.
And I do believe the pandemic accelerated this trend with an ever-growing awareness about systemic risks that we're facing as a society, and also a growing cognizance that part of institutional and retail investors think that ESG factors or environmental, social, and governance factors do not take away from investment returns, as was evident last year in the performance of ESG-oriented funds, for example, over traditional funds. I think the industry also reached a sort of an inflection point over the last two, three years, with maturing environmental, social, and governance strategies and funds and data. And these funds showing little or no perceived cost for integrating sustainability goals with financial goals. So in my view, you know, this momentum will continue to grow and be a focus for companies, regulators, and investors with a worldwide interest in green economic recovery, and also to achieve our climate change commitments under the Paris Agreement, which according to some estimates, is a $16 trillion investment opportunity.
- Can you tell me a bit more about the investment opportunity? I mean, I know that ESG has been a factor for TDS management for a while now, over a decade. But how does ESG factor in from a portfolio management standpoint?
- Yeah, absolutely. And we're very proud of that. And we continue to evolve and push the envelope by integrating ESG factors and portfolio management. At TDAM, we have a cross asset overarching ESG framework that lays out the basic principles and foundations of integrating ESG, whether it be public markets or real assets. So we consider ESG factors a material input in our investment analysis, whether it be at the investment strategy level, sector level, or even at the asset level. Our focus remains on investment excellence and sustainable investing.
The philosophy has been really driving us to invest in sustainable long term investments that are likely to have a secular growth pattern, given the macroeconomic trends. And accordingly, we have been very attentive to some of the ESG aspects of portfolio companies and assets both from a risk and an opportunity standpoint. So our journey was more formalized way back in 2008 when TDAM signed onto the UN principles for responsible investing. And now we're also dedicating a lot more resources and have a dedicated ESG team that works alongside the investment team to lead this integration in this fast-evolving space.
- One of the expressions of all that work of course, is that I know the TD has teamed up with Morningstar to launch three new ESG ETFs this year, a Canadian, and international, and a US ETF. Could you tell us about these?
- Yeah, absolutely. So we launched three new ESG ETFs, TD Morningstar, ESG Canada Equity Index ETF, US Equity, and International Equity. And thanks for mentioning it, Kim, because it is a strategic area of focus for us to give our investors choices and exposure to companies with high ESG ratings across a broad number of factors, such as alignment of management compensation with shareholder returns, health and safety issues, environmental impact, and many other important ESG factors. The funds also stay away from certain perceived problematic industries like tobacco weapons, gambling, and also from those companies that have been embroiled in controversial business behavior, bribery, and corruption incidences, or in human rights violations. So we've been very proud to bring these to market. And with these ETFs, our clients can access best in class ESG companies and also closely track the broad index returns at the same, time.
- Priti, I apologize. We're going to have to leave it there. But I would love to have you back. I know there's a great deal more talk about ESG. So will you join us again?
- Absolutely. Any time, Kim.
[MUSIC PLAYING]
- 2020 was a historic year in a multitude of ways. It really forced a focus on systemic inequalities and the pressing issue of climate change, which in turn from an investing standpoint, put a growing spotlight on the role of capital markets on environmental, social, and governance, also known as ESG investing. Joining me now is Priti Shokeen. She's head of ESG Research and Engagement with TD Asset Management to talk about all the great work they're doing. Priti, thanks so much for joining us.
I know ESG has been around for a number of years. And you've got a recent report that just came out you know back in 2020 the dialogue in the corporate world really moved from I call passive to active, from do no harm to invest with purpose. What do you think that change really means?
- Yeah, thanks, Kim. And good to be here with you at MoneyTalk. I think the primary reason for the shift is changing societal expectations, and sort of a growing appetite to invest with a purpose. So at TD Asset Management, for example, we are seeing client demand, both on individual investor level, who are looking to align their investments with their personal values, and new generation and old questioning the status quo of things, whether it be from a climate perspective or social inequalities, and also from institutional investment side. I think a number of our clients are acknowledging that they have a role to play in shifting our current production systems or patterns to a more sustainable one.
And I do believe the pandemic accelerated this trend with an ever-growing awareness about systemic risks that we're facing as a society, and also a growing cognizance that part of institutional and retail investors think that ESG factors or environmental, social, and governance factors do not take away from investment returns, as was evident last year in the performance of ESG-oriented funds, for example, over traditional funds. I think the industry also reached a sort of an inflection point over the last two, three years, with maturing environmental, social, and governance strategies and funds and data. And these funds showing little or no perceived cost for integrating sustainability goals with financial goals. So in my view, you know, this momentum will continue to grow and be a focus for companies, regulators, and investors with a worldwide interest in green economic recovery, and also to achieve our climate change commitments under the Paris Agreement, which according to some estimates, is a $16 trillion investment opportunity.
- Can you tell me a bit more about the investment opportunity? I mean, I know that ESG has been a factor for TDS management for a while now, over a decade. But how does ESG factor in from a portfolio management standpoint?
- Yeah, absolutely. And we're very proud of that. And we continue to evolve and push the envelope by integrating ESG factors and portfolio management. At TDAM, we have a cross asset overarching ESG framework that lays out the basic principles and foundations of integrating ESG, whether it be public markets or real assets. So we consider ESG factors a material input in our investment analysis, whether it be at the investment strategy level, sector level, or even at the asset level. Our focus remains on investment excellence and sustainable investing.
The philosophy has been really driving us to invest in sustainable long term investments that are likely to have a secular growth pattern, given the macroeconomic trends. And accordingly, we have been very attentive to some of the ESG aspects of portfolio companies and assets both from a risk and an opportunity standpoint. So our journey was more formalized way back in 2008 when TDAM signed onto the UN principles for responsible investing. And now we're also dedicating a lot more resources and have a dedicated ESG team that works alongside the investment team to lead this integration in this fast-evolving space.
- One of the expressions of all that work of course, is that I know the TD has teamed up with Morningstar to launch three new ESG ETFs this year, a Canadian, and international, and a US ETF. Could you tell us about these?
- Yeah, absolutely. So we launched three new ESG ETFs, TD Morningstar, ESG Canada Equity Index ETF, US Equity, and International Equity. And thanks for mentioning it, Kim, because it is a strategic area of focus for us to give our investors choices and exposure to companies with high ESG ratings across a broad number of factors, such as alignment of management compensation with shareholder returns, health and safety issues, environmental impact, and many other important ESG factors. The funds also stay away from certain perceived problematic industries like tobacco weapons, gambling, and also from those companies that have been embroiled in controversial business behavior, bribery, and corruption incidences, or in human rights violations. So we've been very proud to bring these to market. And with these ETFs, our clients can access best in class ESG companies and also closely track the broad index returns at the same, time.
- Priti, I apologize. We're going to have to leave it there. But I would love to have you back. I know there's a great deal more talk about ESG. So will you join us again?
- Absolutely. Any time, Kim.
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