It is a win-win for companies to target the social aspects of doing business, next to environmental responsibility and proper governance, and it can be so for investors as well, argues senior portfolio manager Maria Luz Diaz Blanco.
Listen to the podcast with Maria or read the article below.
Being inclusive can lead to better results. It can also raise a company’s standing among the general public, in the labour market, among suppliers and customers and with regulators and investors.
In our view, organisations that are more diverse will tend to beat their less diverse rivals in terms of both revenues and profits. Diverse teams lead to more innovation, with a direct and positive impact on revenues. Profits benefit from a higher percentage of women, especially at the top, or greater diversity in terms of ethnicity, gender, social background, etc.
Here are selected facts on the benefits of an inclusive growth approach to business.
Starting with an investment universe of 1 600 companies, mainly in the developed markets, but also including some emerging market and small-cap companies, we apply a liquidity screen as well as an ESG screen and inclusive growth selection criteria.
This trims the universe to 1 000 companies. Fundamental company and industry analysis including ESG factors, stock and portfolio risk management criteria results in an investable portfolio.
Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients.The views expressed in this podcast do not in any way constitute investment advice.
The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.
Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).
Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.