Sustainable investing isn’t any different than traditional value investing because both focus on the long view, says Yimei Li, CEO of China Asset Management, in an interview for CNBCat their Sustainable Future Forum.
Factoring in ESG—environmental, social, and governance—criteria can help investors in their value investing strategies, ie. looking for companies that appear to be trading below their intrinsic value, and could potentially do well in the long term.
Because investment is about finding the best values in the long run, “there’s nothing more important than sustainable growth” for fundamental investors, Li said, as quoted in the article. However, she added that ESG standards should adapt to local circumstances, pointing to governance standards that focus on bolstering female representation on company boards, which in China is “not that hard to achieve,” as an example.
While sustainable investing has become more and more popular in the past several years, some analysts caution against using ESG as a simplistic shortcut, and instead advise using the strategy alongside a value investing approach. Rather than using ESG as a “catch-all,” investors should evaluate if a company includes sustainability in its business practices. And the companies that have found ways to address the risks around ESG are more likely to improve their returns in the long term, the article concludes.