By Tom Boucher
Director of ESG
Van Eck Associates Corporation
Sustainable investing is an investment approach that, alongside financial results, can also seek to generate positive environmental, social or governance (ESG) outcomes. It integrates ESG factors and risk considerations when making investment decisions while often aligning investment opportunities with investors’ values.
Environment criteria include energy consumption and impact on climate change, greenhouse gas emissions, waste, pollution, conservation of natural resources and treatment of animals.
Social the criteria consider a company’s relationships with its stakeholders and include working conditions, impact on local communities, health and safety, employee relations and diversity, equity and fairness. inclusion.
Governance, includes, among other things, the correct use of precise and transparent accounting methods, fair voting, the prevention of conflicts of interest and the absence of illegal behavior.
VanEck recognizes the importance of these factors in its investment philosophy and processes. The company believes that appropriate management of a portfolio company’s sustainability risks and opportunities should not only translate into that company’s operational strength, financial performance and differentiated outlook, but can also impact on valuation.
For these reasons, we recognize that it is in the interest of our clients to include these considerations, where possible, when making investment decisions. We also recognize that companies that exhibit strong sustainability practices can be both more competitive and more successful in the medium to long term.
Our commitment to responsible investment
VanEck is a signatory to the Principles for Responsible Investment (PRI), an investor initiative in partnership with the UNEP Finance Initiative and the United Nations Global Compact. As a signatory, we formally commit to integrating sustainability factors and analyzes into our investment processes.
Governance, “active engagement” in particular, has always been a major consideration in our research and investment processes and our efforts to refine the questions we ask in each industry continue to evolve. We believe that an important part of our responsibility to our clients goes beyond encouraging change that can enhance, protect and provide shareholders with opportunities to achieve their investment goals. This further implies seeking to mitigate associated risks, including those related to sustainability.
Sustainable investing at VanEck
Active Strategies: Governance is particularly important to our active emerging market equity strategy. Companies can have higher concentrations of internal ownership and looser rules. Through our active gold mining strategy, we rigorously monitor corporate compliance with industry best practices and now have much more meaningful and constructive interactions with corporate boards on these topics than to 10 years ago. Our recently launched Active Environmental Sustainability Equity Strategy takes a holistic approach to sustainability, addressing critical land and water factors, as well as greenhouse gas emissions, through global exposure to a wide range of companies deliberately focused on these issues.
Passive strategies: We were one of the first ETF issuers to offer environmentally sustainable exposures and we continue to research how these and sustainability-related strategies can add value to our clients’ portfolios. VanEck offers a number of ETFs, both equity and fixed income, either with sustainability-related themes or with approaches that use specific selection criteria and/or indices.
Sustainable investing in the future
VanEck acknowledges that the intentions, thinking, and evidence in this space continue to grow. We remain committed to identifying factors that can enhance, protect and provide investment opportunities for shareholders.
We continue to believe that this work ultimately helps us meet our fiduciary duty to clients; our clients achieve their goals; and further promote improved corporate behavior.
Originally published by VanEck on January 13, 2022.
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Please note that VanEck may offer investment products that invest in the asset class(es) or industries included in this blog.
This is not an offer to buy or sell, or a solicitation of an offer to buy or sell, any of the securities mentioned herein. The information presented does not imply the provision of personalized investment, financial, legal or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, speak as of the date of this communication and are subject to change without notice. Information provided by third party sources is believed to be reliable and has not been independently verified as to its accuracy or completeness and cannot be guaranteed. The information contained herein represents the opinion of the author(s), but not necessarily that of VanEck.
Sustainable Investing Considerations: Sustainable investing strategies aim to consider and, in some cases, integrate analysis of environmental, social and governance (ESG) factors into the investment process and portfolio. Strategies across geographies and styles address ESG analysis and incorporate the results in various ways. The incorporation of ESG factors or sustainable investing considerations may prevent the portfolio manager from participating in certain investment opportunities that would otherwise be consistent with its investment objective and other primary investment strategies.
ESG investing is qualitative and subjective in nature, and there can be no assurance that the factors used by VanEck or any judgment exercised by VanEck will reflect the views of any particular investor. Information regarding responsible practices is obtained through voluntary or third-party reports, which may not be accurate or complete, and VanEck depends on this information to assess a company’s commitment to or implementation of responsible practices. . Socially responsible standards differ by region. There can be no assurance that the socially responsible investment strategy and techniques employed will be successful.
Any investment is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that the investment objectives will be achieved and investors may lose money. Diversification does not guarantee a profit or protect against loss in a declining market. Past performance is not indicative of future results.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.