ESG matters have become a major focus in investment portfolios over the past decade. What was considered a more niche branch of investing has taken centre stage in the world of investor relations. In this episode of Enquire - The Investor Relations Podcast, we sit down with Maria Elena Drew, Director of Research for Responsible Investing at T. Rowe Price, to learn more about how IR teams can approach ESG.

Balancing Responsible Investing with Financial Performance

Maria shares her fascinating journey from equity investor to ESG specialist, recounting her experiences with high-profile cases like Enron and Yukos. She offers a unique perspective on how these experiences shaped her approach to incorporating ESG factors into investment decisions.

Maria takes us through T. Rowe Price's proprietary ESG rating system, known as the Responsible Investing Indicator Model (RIIM). She explains how this system covers over 15,000 corporate issuers and combines data from various sources with their own fundamental analysis. Maria also discusses the collaborative approach between the responsible investing team and portfolio managers, highlighting how they work together on company engagements and portfolio reviews.

The conversation then shifts to the specifics of analysing companies through an ESG lens. Maria breaks down how T. Rowe Price examines environmental and social metrics, considering both a company's operations and its end products. She emphasises the importance of tailoring the analysis to different industries and geographies, showcasing the nuanced approach required in responsible investing. Throughout the episode, Maria's insights provide a valuable glimpse into the evolving world of ESG integration in investment decision-making.

In This Episode:

• Maria takes us through her career history
• How she began to learn more about ESG issues
• What investors want to know about ESG
• How her team operates
• The challenges of ESG
• Metrics her team looks at when assessing high-risk companies
• How T. Rowe Price measures environmental impact
• Why ESG exclusions could be harming sustainability goals
• Engagement between companies and PMs
• The current trends in ESG benchmarks and investing

Quotes:

“What's interesting about ESG is it grew so fast in the industry, you know, it went from being pretty much irrelevant, except to really niche group of investors, to becoming a table stakes requirement.”

“The number one trend we're seeing right now is looking at a relatively new metric, which would be net zero status.”

Resources:

• Connect with Maria Elena Drew