There has been a well-publicized conflict playing out in the national media and various political arenas between those opposed to and in favor of the use of environmental, social and governance (ESG) considerations in investment decisions. Fund managers have been caught in the middle of that debate, which is now pulling in investors who are forced to grapple with how forcefully they should demand social impact considerations when choosing managers to invest. As part of its inaugural Conference on Emerging Trends in Asset Management, the SEC’s Division of Investment Management (IM) hosted a panel on investor choice in proxy voting, incorporating ESG considerations in the investment process and the implications for fiduciaries. The panel featured Dalia O. Blass, partner at Sullivan & Cromwell and former Director of IM; Carsten Stendevad, co-CIO for sustainability at Bridgewater Associates; and Lisa M. Fairfax, presidential professor at University of Pennsylvania Carey Law School. This first article in a two‑part series describes the entrenched positions and battle lines on ESG issues, as well as the role investors play in the conversation around integrating ESG criteria. The second article
explores the challenges and considerations fund managers need to weigh when navigating investor choice as to ESG integration and the fiduciary implications involved. See our two-part series: “SEC Commissioners Peirce and Roisman Argue Against Prescriptive ESG Disclosures
” (Aug. 24, 2021); and “SEC Commissioners Gensler and Lee Advocate Further SEC Oversight of ESG Efforts
” (Aug. 31, 2021).