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Portfolio > Portfolio Construction > ESG

Morningstar, MMI Launch Sustainable Investing Initiative

By Bernice Napach

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The Money Management Institute and Morningstar have launched a sustainable investing initiative to help educate advisors about environmental, social and governance (ESG) strategies, which are becoming increasingly popular among investors and asset managers.

By year end 2016, sustainable, responsible and impact (SRI) investing accounted for $1 out of every $5  under professional management in the U.S., a total $8.72 trillion which was 33% more than in 2014, according to the U.S. Forum for Sustainable and Responsible Investment Foundation (US SIF).

The MMI/Morningstar sustainability program will include workshops, forums and educational content from experts in the field “to provide financial advisors with the knowledge they need to engage with their clients on the topic and recommend appropriate investments,” according to press release.

Eaton Vance affiliate Calvert Research and Management, Merrill Lynch and FlexShares Exchange Traded Funds at Northern Trust Asset Management will serve as leadership sponsors of the initiative, helping to underwrite the program and course development, and Morningstar will contribute data and analysis and co-host events with MMI, according to MMI President and CEO Craig Pfeiffer.

“We are committed to advancing ESG engagement to mirror what’s happening in the marketplace,” said Pfeiffer. “Leading asset management firms are ramping up the development and delivery of ESG-driven investment solutions as investor demand—particular from women and millennials—for responsible investment strategies continues to grow.”

(Related: Betterment Launches SRI Portfolio Strategy; Wealthfront Planning One)

In the past two weeks alone, Betterment, the largest independent digital financial advisor launched a socially responsible (SRI) portfolio strategy that’s available on all its platforms and its smaller rival Wealthfront said it, too, was working on a SRI strategy. Also in recent weeks at least three new ETFs came to market with a focus on ESG—two from Blackrock and one from Nuveen, and overseas a European Commission-appointed group suggested that money managers increase disclosure about ESG factors and a manager of the Japanese government’s pension fund announced he wants to increase the fund’s ESG exposure from 3% to 10%.

(Related: Bond ETFs Are Hotter Than They’ve Ever Been)

Morningstar’s sustainability research head, Jon Hale, said in a statement that “clients are clearly interested in discussing ESG with their financial advisors but the majority of advisors need more professional education and practical insights on incorporating sustainable investing into their practices s to feel comfortable having those conversations.”

The MMI/Morningstar initiative is in the process of developing the program and expects to hold the first of its forums in September or October and course in the fourth quarter, according to a spokeswoman.

Advisors who want more information about the initiative and are interested in updates can email [email protected].

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