The Fourth Industrial Revolution

At Clearbrook, we believe the increased commitment to ESG responsibility is just one manifestation of a more profound change, one some observers have called the Fourth Industrial Revolution. It marks a tectonic shift in the way businesses and economies operate, incorporating a more inclusive and sustainable model for economic growth. Driven by digitization and the efficiencies of sustainability, the Fourth Industrial Revolution’s emergent technologies, structures and processes will shape opportunity and risk for long-term investors.

What are the implications of ESG for your portfolio?

We know you want your portfolio to have a positive environmental and social impact. But we also know you have promises to keep – real world fiduciary obligations that demand short-term liquidity and long-term appreciation.

The fundamental case for ESG investing: You are investing for a purpose – goals that reflect your fundamental values. Shouldn’t the process for achieving those goals reflect your values as well? Clearbrook will help you develop customized ESG strategies that align your portfolio with your values, without jeopardizing the returns you need to achieve your objectives.

The business case for ESG investing. Let’s look at why ESG investing isn’t just the responsible thing to do; it’s the smart thing.

• You don’t have to sacrifice performance: There is a growing body of evidence that integrating ESG criteria into your investment strategy can still produce competitive returns. For example, the MSCI KLD Social Index was one of the earliest widely-followed benchmarks in the ESG space. Since its inception on May 31, 1994, it has achieved and average annual return of 9.77%, compared with 9.63% for the corresponding MSCI USA IMI Index. Risk metrics for the two indexes were comparable (Sharpe Ratio of 1.04 for the KLD vs. 1.03 for the USA).
• This is where major opportunities will emerge: As the Fourth Industrial Revolution takes hold, emergent technologies will converge with the need for greater positive sustainable impact and sustainable growth. Your portfolio needs to be there too.
• This is where major risks will lurk: Which sectors, industries and companies are just one crisis away from major financial problems? Effective risk mitigation will be one of the driving investment themes of the ESG era.
• Your advocates are watching: They are demanding ever-higher standards of responsibility, transparency and accountability. And your ESG strategy doesn’t just affect the growth of existing assets; it can affect your ability to attract new assets.

What’s the best approach for you?

A commitment to ESG can operate at several levels, from simply screening out non-conforming investments to proactive, direct engagement to maximize ESG impact.

• Screening out negative ESG
• Screening for postive ESG
• Portfolio-wide ESG integration
• Impact investing
• Active engagement

What’s the right level? That depends on multiple factors. What’s realistically achievable, given your fiscal needs and current portfolio? What’s driving your commitment? What do your stakeholders expect? What else do you need to know to make a responsible decision?

What’s the right level? That depends on multiple factors. What’s realistically achievable, given your fiscal needs and current portfolio? What’s driving your commitment? What do your stakeholders expect? What else do you need to know to make a responsible decision?

What’s the right level? That depends on multiple factors. What’s realistically achievable, given your fiscal needs and current portfolio? What’s driving your commitment? What do your stakeholders expect? What else do you need to know to make a responsible decision?

What’s the right level? That depends on multiple factors. What’s realistically achievable, given your fiscal needs and current portfolio? What’s driving your commitment? What do your stakeholders expect? What else do you need to know to make a responsible decision?

What’s the right level? That depends on multiple factors. What’s realistically achievable, given your fiscal needs and current portfolio? What’s driving your commitment? What do your stakeholders expect? What else do you need to know to make a responsible decision?

Why choose Clearbrook as your ESG partner?

Clearbrook’s fundamental investment strengths can give you an edge in the emerging ESG environment.

• We have experience across virtually every asset class, market cycle and investment objective: Clearbrook isn’t just a traditional consultant. We’ve managed money globally through bull, bear and crisis markets.
• We’ve navigated fundamental economic, market and technological shifts before: Clearbrook has managed assets through deepening globalization, the emergence of the internet, accelerating automation, and dramatic shifts in the competitive landscape. We’re prepared for the Fourth Industrial Revolution’s opportunities and risks, because we understand how emergent businesses succeed…and how they fail.
• We’ve been in your shoes: Clearbrook’s team has been on all sides of the investment relationship. We know what it means to have commitments to meet, and we understand the importance of clear, substantive reporting and communications, and of a good working relationship with your investment committee and board.
• We’re not newcomers to ESG: Clearbrook has helped clients successfully integrate ESG responsibility into their investment strategies, including transition planning to ensure continuity in liquidity and returns.
• We don’t look at ESG in isolation: Our “whole portfolio” perspective enables us to develop a customized ESG solution in the context of your total portfolio and needs.
• We have a laser focus on risk: Mitigating risk is particularly important in times of fundamental changes in society, technology and market expectations.

Your Institution’s Existing Portfolio

Clearbrook’s ESG Integration Process

An ESG strategy customized for your values and your needs