Hermes confirms “governance premium” in ESG investing

Two years on from research into the effects of corporate governance on investment returns, a pension scheme investor finds that poorly run companies still tend to underperform by an average of 30 basis points per month. The research by London-based Hermes Investment Management – a fund manager owned by the British Telecom Pension Fund – found the same figure two years ago. The firm’s latest report is called ‘ESG Investing: It still makes you feel good, it still makes you money’. Geir Lode, head of global equities, said it showed the “governance premium is well and truly entrenched” in returns. The research found Japan’s ESG – or environmental, social and governance – scores lagged Asia Pacific ex-Japan, Europe and North America. While North American companies scored highest on corporate governance, environmental and social scores trailed. Hermes examined equity returns from 2009-2016. Lode said the governance premium held true across different geographies and sectors – albeit with a few caveats – proving the almost “universal power of effective corporate governance”. ©2016 funds europe

Executive Interviews

CEO INTERVIEW: Munro gains three-year track record

Mar 16, 2017

Aviva Investors’ annual results this month were the third set since Euan Munro took over as CEO. Nick Fitzpatrick speaks to him about the ‘Aims’ fund at the heart of the firm’s outcome strategy.

DISTRIBUTION INTERVIEW: Tales of the unexpected

Mar 16, 2017

Laurence Terryn, a fund selector at Candriam, tells David Stevenson how the twists and turns of the past year’s macro environment flavoured her approach to fund selection.

Roundtables

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Funds Europe speaks to leading Luxembourg industry figures about the growing regulatory demands on asset servicers and how to remain profitable in spite of major investments in technology.

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Industry heavyweights, including agent lenders, discuss issues affecting the securities lending sector such as regulation and the types of collateral being used.