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

EXECUTIVE INTERVIEW: This is the year

Feb 16, 2017

Mark Weeks, head of ETF Securities, reflects on Brexit’s trampling of the FTSE and tells Nick Fitzpatrick he hopes to see stock and bond inflows top commodities for the first time this year.

EXECUTIVE INTERVIEW: A natural interest in the topic

Feb 16, 2017

Since 2016, Guillermo Ortiz has been a chairman of Latin America’s BTG Pactual. The former central banker of Mexico talks to Nick Fitzpatrick.

Roundtables

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Jan 11, 2017

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

EMERGING MARKETS ROUNDTABLE: The re-emergence

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