What drives sustainable investment at a trillion-dollar US asset manager?

Doing well by doing good? Reassessing the link between sustainability and performance

"Doing well by doing good" was an often-heard refrain at conferences throughout the early 2020s. It was even supported by influential academic studies that claimed sustainability and investment performance were highly correlated. Then came the invasion of Ukraine, giving a boost to dirty and opaque sectors such as energy and defence, and sustainability began to look like a drag on returns. ESG came under fire, with right-wing commentators arguing that it contravened funds' fiduciary duty. Four years on, with new conflicts emerging in the Middle East, the relationship between sustainability and performance is as hotly debated as ever. In this episode, editor Lucy Fitzgeorge-Parker discusses the evolution of thinking on the topic with Jason Mitchell, CIO for responsible investment at Man Group. They discuss the performance implications of exclusionary strategies, the use of quantitative methods to generate trading signals from climate and other non-financial data, innovative ways to leverage AI in sustainable investment, and how ESG might be depoliticised.

What's next for SFDR 2.0?

The European Union's Sustainable Finance Disclosure Regulation (SFDR) [http://responsible-investor.com/SFDR] is one of the most important frameworks in the ESG fund space, and one of the biggest headaches. Since the European Commission seized the chance to turn the regulation into a truly usable system as part of its simplification agenda, investors have been nervously awaiting the finalised changes. In this episode, senior reporters Khalid Azizuddin and Dominic Webb discuss the proposed reforms, some of the key concerns raised by investors from sovereign bonds on fossil fuel exclusions, and how the European Parliament and Council of the EU positions are shaping up. They also set out how trilogue negotiations between Council, Parliament and Commission may play out, and what political pitfalls lie in wait as Parliament develops its final position.

Recalibrating investor action on climate change

Have investors overstated their ability to drive climate action? Have top-down, targets-driven models of decarbonisation taken the industry down a blind alley? And if so, where should sustainability-minded asset owners and managers refocus their efforts? A new report from the LSE [https://www.fmg.ac.uk/isf/research-project/what-can-investors-do-about-climate-change] argues for a reappraisal of the topic, based on an acceptance that investor action on climate will be dependent on government policy and technology development. In this episode, editor Lucy Fitzgeorge-Parker speaks with Tom Gosling, the report's co-author and professor in practice and director of the Initiative in Sustainable Finance at the London School of Economics, about what this recalibration means in practice – and whether the responsible investment community is ready for it. Key topics include the future of corporate net-zero targets, the challenges of supporting the energy transition in emerging markets, and the practicability – or otherwise – of policy engagement on climate by institutional investors.

How to improve conversations with portfolio companies

With attacks on shareholder rights on both sides of the Atlantic and widespread rollbacks, rescissions and retractions of sustainability commitments, the relationship between investors and their portfolio companies is increasingly turbulent. In this episode of The Responsible Investor Podcast [https://www.responsible-investor.com/podcast/], Dominic Webb speaks to Sallie Pilot, managing director of the Investor and Issuer Forum [https://investorandissuerforum.org.uk/], a UK-focused initiative aiming to improve the interactions between investors and listed companies in the country. The pair discuss how to improve conversations along the investment chain, some of the pain points in the relationship and how to strike a balance between equity market competitiveness and investor rights and information needs.

Where does transition finance need to go from here?

Transition finance investment products continue to gain popularity among investors, according to recent ESG fund flows reports [https://assets.contentstack.io/v3/assets/blt9415ea4cc4157833/bltfe8ef6bf6de598ea/Global_ESG_Flows_Q1_2025_Report.pdf]. Yet it is not always possible to establish whether capital is being funnelled into the critical activities needed to transform carbon-intensive sectors. In this episode, Navindu Katugampola, global head of sustainability at Morgan Stanley Investment Management, explores best practices on transition finance based on his experience overseeing the $1.9 trillion US fund manager's activities in the area. Key topics discussed include what to look for in company transition plans, regulatory and policy developments, and the climate transition's regional characteristics.