Investment Strategies by Candriam Drive Investor Profits
In a significant shift, asset managers are now focusing on the role companies play in addressing the world's sustainability challenges beyond their core sectors. This holistic approach considers a company's contribution to the United Nations' Sustainable Development Goals (SDGs), not just its financial performance.
This shift is particularly evident in the renewable energy sector, where asset managers are investing in companies that manufacture wind turbines or solar panels. These companies are using the SDGs as a reference framework to demonstrate their contribution to these goals.
Large companies like Coca-Cola, Dell, DuPont, GE, and Pfizer are already implementing the SDGs in their strategic planning. The green economy, which includes sectors such as renewable energy, eco-friendly buildings, sustainable transportation, water management, waste management, and land management, is witnessing increased participation from these corporations.
Numerous studies highlight the importance of Environmental, Social, and Governance (ESG) factors in evaluating corporate performance. Candriam, with its 25-year experience in managing sustainable portfolios, underscores this fact. The holistic perspective ensures that investors avoid poor companies with potential reputational risks.
Investors can potentially increase their returns by combining key ESG factors with sustainability-oriented investment themes aligned with the SDG goals. This approach is gaining traction, with investors increasingly demanding that wealth managers offer innovative investment strategies that intertwine thematic investments with ESG aspects.
Semiconductor manufacturers are also contributing positively to combating climate change by providing critical components for electric vehicles and their charging infrastructure. Chip manufacturers also contribute to reducing greenhouse gas emissions due to their products being used in electric vehicles.
However, a more holistic approach in the semiconductor industry would consider hazardous chemicals used in production and the handling of chemical waste. A possible ESG strategy for a chip manufacturer in the renewable energy sector could focus on minimizing environmental impact by using sustainable materials and energy-efficient production processes, as well as ensuring social responsibility and strong governance standards throughout the supply chain.
The holistic analysis of ESG factors is an integral part of New York Life Investments and Candriam's sustainable investing engagement. Considering a company's ESG practices is key to a comprehensive overview of the company's prospects and can lead to better risk-adjusted returns.
For investors seeking to learn more about thematic investments considering ESG aspects, more information can be found here. Asset managers are expected to continue considering the contribution of companies to the SDG goals, not just their financial performance, as the world moves towards a more sustainable future.
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