While the battle for ESG headlines rocks back and forth between conservative detractors and those who embrace ESG as crucial investment data, Morgan Stanley has chosen to tune out the noise and introduce a new lineup of 6 ETFs that integrate ESG.
As reported in a Bloomberg article, Morgan Stanley Doubles Down on ESG Despite the Politics,
“Morgan Stanley’s decision is particularly notable given the increasing pushback against ESG by Republican politicians, including some potential presidential aspirants, and their fossil-fuel industry donors…The equity and fixed-income exchange-traded funds are managed by Calvert Research and Management, a leader in environmental, social and governance investing."
What Does it Mean for Investors?
The move by Morgan Stanley encapsulates the market realities that:
a) investors are demanding legitimate ESG options,
b) long-term, ESG will be part of the investment landscape, and
c) integrating ESG is more important to asset managers than the political brushfires (climate change pun intended).
“...ESG isn’t going away, [said John Streur, Chairman of Calvert]. In fact, more companies are focused on reducing their exposure to financially material environmental, workplace and corporate governance risks than ever before, he explained."
What Should Financial Advisors Do?
Consider that Anthony Rochte, Morgan Stanley’s global head of ETFs, explained in the article that “decisions like these are made looking five to 10 years down the line.”
Advisors frequently think in those terms on behalf of clients. The job requires taking a longer-term view and considering what client portfolios and needs may be on a three to five year time horizon, or even decades out.
Indeed, many an advisor has fielded the call from an irrational client that is overreacting to a moment in time or is stuck on an investment approach that doesn’t consider the future. Advisors who counsel clients to take the long view should do the same when it comes to ESG.
ESG is part of the long-term plan, regardless of the headlines, and advisors must be able to communicate with clients about what’s coming.