Biden has voiced support for a gradual energy transition in which natural gas (and by extension the controversial practice of fracking) will likely remain categorized as a “transitional fuel.” From an ESG investing standpoint, we believe the focus on environmental protection and operational health and safety will continue to be material issues at the forefront of the fracking debate.

The Covid-19 pandemic and its material human, economic and financial costs will also likely continue supporting the notion that the environment, public health and global economy intertwine. Therefore, another key ESG issue in 2021 will be the implications of transitioning toward a circular economy, which goes beyond increased use of renewable energy or recycling. To be successful, it must represent a systemic shift in value chains. Companies must rethink resource consumption, energy usage and manufacturing processes with an aim toward eliminating waste and generating renewable output. We see upside potential in several areas, including water and waste management, sustainable agriculture, bioenergy and renewable biochemicals, smart grid technologies and power storage.

Like with any form of systemic change, moving effectively toward a circular economy, fostering a clean tech innovation “revolution,” and implementing concrete policies to contain climate change shouldn’t be about speed per se. Tactical changes are seldom sustainable, but strategic ones tend to be. Before articulating an argument on how sustainable development is achievable, it’s necessary to focus on why it isn’t.

 If sustainable development isn’t yet compatible with our current, fossil fuel-dependent and open-loop system, change must come from within the system. We believe the Biden administration’s key challenge will be maximizing the incentives to scale advanced and knowledge-intensive renewable energy/closed-loop solutions while balancing social and economic considerations to which the U.S. is currently exposed. Sustainability is not a binary concept—it is also about establishing an equilibrium between shared priority issues for all stakeholders. This exercise goes beyond defining “materiality” ^* and can only be achieved through a sustained effort on the part of business leaders, policymakers and their constituents to gradually evolve traditional measures of productivity, wealth and well-being.

 By Guillaume Mascotto, vice president, head of ESG and Investment Stewardship

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Study results showcasing responses from the United States, United Kingdom and Germany, examined generational and gender-based attitudes toward impact investing and/or environmental, social and governance (ESG) investing.

“For those considering impact investing, healthcare is a top priority for investors in the U.S and the UK,” said Guillaume Mascotto, vice president, head of ESG and investment stewardship at American Century. “While healthcare ranked lower for respondents in Germany, the threat of Covid-19 has put a global spotlight on health and wellness. In any case, our ESG team interpreted the results as an elevation of the social (“S pillar”) within the ESG trilogy.”

For the fourth time, American Century has surveyed adults (18 years or older) to better understand attitudes toward impact investing, financial investments designed to have a positive impact on society, while providing potential long-term returns. The initial survey in 2016 included only U.S. investors, but in recent years, the survey included respondents from the UK and Germany. Study results showed similarities and differences between the three countries.

When asked about which cause “matters most” to them, “healthcare/disease prevention and cures” topped the list in the U.S. and UK at 30 percent and 35 percent of respondents, respectively, which is consistent with the 2019, 2018 and 2016 results.

“Environment/sustainability,” ranked first with respondents in Germany. Other selected causes were “improved education,” “mitigating poverty,” “racial equity and social justice” and “alignment with religious principles.”

While interest in impact investing remains compelling, it did dip slightly in this year’s study from last year. In the U.S., the appeal decreased slightly to 51 percent in 2020 compared to 56 percent in 2019, which was up significantly from 32 percent in 2016. Almost half (48 percent) of the respondents in the UK found the concept of impact investing appealing in 2020 compared to 59 percent in 2019. New to the study this year, 25 percent of survey respondents in Germany found it appealing.

The interest was highest among millennials (ages 21 to 38). In the U.S., 60 percent of millennials found impact investing appealing compared to the UK at 64 percent. By comparison, 45 percent of millennials in Germany found the concept of impact investing important. Appeal among Gen X (ages 39 to 54) was 64 percent in the U.S., 50 percent in the UK and 36 percent in Germany. The appeal for baby boomers (ages 55 to 73), however, was lower, with 46 percent in the U.S., 34 percent in the UK and 26 percent in Germany. In all three countries, when asked about the term “impact investing,” the majority of respondents were “not at all familiar” with the concept. Germany had the lowest familiarity at 70 percent.

The global study also asked survey respondents about how they felt about doing business with companies that align with their values. The results were down this year compared to 2019 in the U.S. and the UK. In the U.S., 29 percent of respondents answered, “Yes, it matters to me,” compared to 32 percent in 2019. And in the UK, 20 percent felt it “matters” compared to 24 percent in 2019. In Germany, 41 percent responded, “No, it does not matter to me.”

On the investment side of the survey, respondents were asked about considerations when making investments. “Return on investment,” “risks,” “fees,” and “length of time the money will be invested” continued to be the most important factors when making investments in all three countries. Respondents were given several factors to consider when making an investment; “impact on society” was at the bottom of the list in the U.S., UK and Germany.

“Our late founder James Stowers, Jr. and his wife, Virginia, transferred their equity ownership stake in American Century to the endowment supporting the Stowers Institute, which has resulted in more than 40 percent of our firm’s annual dividends being directed toward medical research.,” said Mascotto. “From an investment standpoint, our focus on healthcare impact targets companies involved in new or innovative treatments for diseases including cancer; access to medicines and health care services in both developed and emerging markets; new solutions that lead to lowering the cost of health care; and more productive and efficient equipment, services and software used for research, diagnostic tests and therapies.”

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