Erik Gosule on the key drivers of responsible investment

Ahead of the Sustainable Investment Forum North America 2019, taking place in New York on the 25 September 2019 during NYC Climate Week, we caught up with Erik Gosule, Managing Director, Head of Strategic Marketing and Product Development for the Americas at Amundi Pioneer, to discuss the the key drivers of responsible investment .

Let’s start with some background on Amundi Pioneer and your role there? 

Amundi Pioneer is the US business of Amundi, based in Paris, one of the world’s ten largest asset management firms. Globally, Amundi manages about $1.7 trillion in AUM across virtually all asset classes and strategies. Amundi Pioneer manages about $85 billion in the US. Responsible Investment has been a core part of the company’s business strategy throughout its history, and we dedicate substantial resources  towards developing and improving in the area of ESG. This includes a large group at Amundi dedicated to ESG research, participating in industry and government discussions about responsible investing,  and identifying investment strategies that deliver results based on responsible investing.  

I am responsible for developing and managing an integrated marketing platform for Amundi Pioneer’s investment solutions across all channels, including intermediary and institutional. I also lead the firm’s ongoing marketing and product development efforts as well as guiding strategy for key initiatives including Amundi Pioneer’s Responsible Investing/ESG programs. 

What are the key drivers of sustainable and responsible investment? How is this changing?

In our view, Responsible Investing represents the “umbrella” term encompassing a wide array of approaches that range from values-driven strategies to those focused on economic outcomes, such as income generation, wealth creation and/or capital preservation. These approaches can generally be allocated to four categories: Impact Only, Exclusion/Inclusion, Thematic and Integration. In reality, ESG is not in and of itself an investment approach. Rather, ESG factors, either separately or in combination, inform or drive decisions within these strategies.

While traditional SRI approaches have continued to exist, the range of responsible investing strategies has mushroomed. Investors now have a wide array of options to better align with their investment objectives. The rapid increase of RI-related data has been helping investors and asset managers understand how responsible investing may influence a portfolio’s performance. Investors are also becoming more comfortable as they learn more about techniques deployed to mitigate headwinds faced by traditional SRI approaches and how responsible investing can be used increasingly to pursue their performance objectives as well. With this in mind, there is growing evidence that demonstrates how responsible investing may contribute to positive performance.

As one of the world’s largest asset managers, how does Amundi Pioneer include ESG in its decision making? 

ESG factors are critical for both managing risk and achieving investors’ performance objectives. However, we believe ESG should not be viewed in isolation from other factors that impact a company’s fundamental strengths and valuation. The integration of well-executed ESG research in the investment process can and is producing better outcomes for investors because it helps us identify companies with durable business models, which tend to outperform over time. We also see ESG playing an important role in corporate strategy and decision making. We talk to thousands of companies each year as part of our investment process, and we’re seeing first-hand that companies are taking ESG seriously. And the companies that take these issues seriously are more likely to be considered for our portfolios.

Our firm has emphasized sustainable investment practices for decades.  Our founder in 1928, Philip Carret, believed companies that pursue practices harmful to society offer little, if any, intrinsic value for shareholders. Our risk framework has evolved since then to encompass a broader set of ESG-related risks deeply integrated into our active investment processes. ESG-related considerations, either separately or in combination, inform or drive investment decisions within RI approaches. An actively managed, economically-driven process that integrates ESG criteria can enhance traditional financial analysis by helping to identify and evaluate additional risks and opportunities that impact the sustainability of a company’s business model. Fully integrating ESG criteria with other fundamental elements provides a more complete picture of an investment opportunity in the context of both risk and potential return.

What are the importance of events such as the Sustainable Investment Forum?

Despite the empirical evidence of compounding momentum and forecast growth, the investment community, including asset managers, institutional investors, consultants, advisors and their clients, struggle to define the role of responsible investing within an investment portfolio. Until this issue is satisfactorily addressed, the confusion will serve as a head wind to even greater growth for responsible investing. In our view, the biggest hurdles to overcome are 1) The lack of a common language and definitions for elements that comprise responsible investing, and 2) Misperceptions among investors regarding whether and how responsible investing may contribute to their desired investment outcome. Events such as this Sustainable Investment Forum are key to promoting education and facilitating discussion to help further overcome these hurdles.

Amundi Pioneer is a Gold Sponsor at the Sustainable Investment Forum North America, taking place in New York on 25 September 2019 during Climate Week NYC, find out more here. 

Visit Amundi Pioneer's website here.