Purpose Investments Goes All In on ESG Principles

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The Toronto-based asset manager will add ESG principles to all of its funds

Purpose Investments is the latest asset manager to integrate environmental, social and governance – ESG principles – into its strategies. The catch – they will adopt ESG into every single one of their funds. The company made the announcement on Wednesday. Its goal is to create a new ESG framework and fuse it with as many of its funds as possible by January 1, 2020.

The firm said Wednesday that it already incorporates ESG standards into funds comprising about 75% of its AUM.

In a press release, the firm said it uses a proprietary scoring methodology to calculate ESG scores for its funds. The scores complement other investing models that incorporate value, fundamentals, momentum, and more.

How Purpose Investments Will Work

Purpose Investments says it will publish the ESG score of each fund on its website. It will assign a score across the environmental, social and governance categories. They will then measure their ratings against industry benchmarks.

“We don’t think our clients should have to choose between long-term success and investing in companies they can believe in,” said Purpose Investments CEO Som Seif.

The ESG Principles Craze Continues

Meanwhile, to call ESG scoring and fund incorporation a trend would be an understatement. During the second half of 2019, we’ve seen a surge of asset managers announce news ESG funds. They’ve also adopted new standards and discussed the importance of these principles.

For example:

  • Credit Suisse Asset Management introduced an ESG investing framework across its 30 funds carrying assets more than CHF 20 billion.
  • Oppenheimer & Co. also announced Wednesday that it will launch ESG model portfolios later this year.
  • European derivatives exchange Eurex announced it will add its first exchange-traded ESG options on a European benchmark. The new ESG options, tied to the new STOXX 600 Europe ESG-X Index, will launch October 21.
  • Meanwhile, Preqin announced this week that it has created a new ratings system for ESG factors for private capital funds and investors’ portfolios.

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