Deutsche Bank and Arabesque Asset Management will launch several new ESG investment products to help further social and environmental causes. The companies’ new products will track the returns of two indices of sustainable stocks created by Arabesque. These stocks help keep track of Deutsch Bank’s ESG investments to make them even better.
The new products will track returns of the Arabesque Prime and Systematic indices in particular. They will assess thousands of companies on metrics like how their accounting practices work, the independence of board directors, carbon footprints, and environmental records.
Deutsche Bank will spend the next two years raising a billion Euros for the products.
ESG is an increasingly essential part of business strategy in the modern world. KKR’s Global Head of Public Affairs, Ken Mehlman, believes that the world is only going to be saved at a profit, so businesses must begin to integrate ESG into their practices. KKR has made ESG investments an essential part of their portfolio.
“ESG is core to our business processes, not a sidecar. It is part of the investment committee. It is not separate,” Mehlman says of KKR’s approach to ESG investments. Thus far, KKR has invested about $5 billion in missions that help solve societal problems through business, from food safety practices to investing in an Australian farm that grows tomatoes using water and solar energy.
Now Deutsche Bank and Arabesque also see the importance of ESG and accountable financing. Omar Selim, a chief executive at Arabesque, said, “People care more than ever before about precisely how financial return is generated. This trend is gathering momentum: 5,336 companies published a sustainability report in 2014, up from 294 in 2004. Investors can now clearly see that ESG and financial performance go hand in hand.”
According to the Global Sustainable Investment Alliance, assets invested with sustainable mandates grew 61% between 2012 and 2014. ESG trends have also more than doubled in assets.
Deutsche Bank’s and Arabesque’s products will be available both for retail and institutional investors worldwide.