Hello. I'm Mike, a lawyer living in Hong Kong.
M Power Partners Fund Have you heard of the M Power Partners Fund?
It is a venture capital fund launched in the first half of this year by Ms. Kathy Matsui, a former Goldman Sachs employee, and three of her female colleagues. This fund has attracted attention in many ways, but the most exciting is that it is the first ESG investment fund among venture capital firm s.
The other day, this fund was featured on Teletext's " Mosate" and Kathy was on the show live (not live, as I watched it online later via the Teletext BIZ app). I couldn't help but get on my knees to watch the timely feature, but Kathy said that it is difficult for major listed companies to make ESG a major management issue. So, I want to make ESG take root in immature venture companies through investment.
Excellent!
Here, Teshima cuts to the chase.
YUTAKA: "IS THERE A BALANCE BETWEEN ESG INVESTING AND DELIVERING RETURNS?"
CA: "ESG HAS BEEN PROVEN TO DELIVER HIGHER RETURNS. THERE IS NO TRADE-OFF THERE, IT GOES BOTH WAYS."
This answer, we need to understand correctly.
What is ESG investment?
ESG The term "ESG" has been heard here and there in Japan since around 2010.
TKG also started around that time. Not that it matters.
ESG is a concept advocated from an investor's perspective ESG is not only about returns. Investors should not only seek returns on their investments, but should also consider the ESG initiatives of the companies they invest in and invest in a socially responsible manner. Initially, ESG was seen as a volunteer activity of the company and was not considered as a CSR activity. an essential element in the long-term performance of a company But gradually, people have come to understand that If a company only pursues profit and is indifferent to environmental destruction, or cuts costs through harsh working conditions, it may make a profit in the short term, but it will eventually pay back and decline. ESG investment is a long-term, sustainable win-win situation for shareholders, employees, customers and communities.
Quite right.
This is where ESG investment trusts and ESG funds come into play. It is common sense in the world that if a company is expected to increase its value, we should create a mechanism to invest in it. In the first place, it is almost impossible for ordinary investors to analyse and evaluate which companies are working on ESG and to what extent, so it would be reasonable to leave it to professionals to decide where to invest.
This is also absolutely correct.
ESG-related investment trusts and funds seem to be popular, partly because the Corona disaster has raised awareness of the social environment. Various financial institutions are competing to sell ESG investment products, comparing their returns in each year with other funds, boasting of high performance or ridiculing themselves for surprisingly low returns.
Hold on!
ESG investing is an investment that takes into account all stakeholders.
It is. Isn't it contradictory to evaluate it only in terms of returns to shareholders?
Of course, shareholders also pursue and gain profit. It's not like they are making a donation. But since a company makes money only through the coexistence and interaction of all these parties, the profits are not the total share of the shareholders, but are shared fairly among employees, customers, and the community, and this is the source of ESG investment. This is the origin of ESG investment.
Shareholders are encouraged to invest with the expectation of stable long-term returns over 10 or 20 years, even though short-term returns may be modest.
If this is the case, then it is pointless to compare single-year returns, ROE, dividend payout ratios and other indicators year on year, and one wonders whether ESG funds that boast of these are genuine. I doubt it.
ESG investments will continue to increase. However, when general investors enter funds and investment trusts, it is essential that financial institutions accurately explain to these investors that they are not looking for short-term returns and encourage them to make sound investments. If there are any fake ESG funds that pander to investors who think they can easily make money on some fad or pander to such investors and sell them high short-term returns, they should be promptly removed from the market.
Now, Cathy's answer to the previous Teshima caster.
He didn't explain in detail, but I think he meant that he wanted to make a stable return over the long term. I'm sure the fund investors understand that and are not interested in yearly returns.
M-POWER PARTNERS FUND, WE'RE COUNTING ON YOU!
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