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There's a 'great correlation' between a good company culture and profits, ESG investors say

Key Points
  • Investors Afsaneh Beschloss and Clifton Robbins think incorporating ESG will be the best way to improve returns moving forward.
  • "If you really think about it and are interested in the highest returns, this is the best way to go about it," Beschloss says.
  • Some investors are apprehensive about incorporating these principles in fear of missing out on potential profits.
  • Robbins of Blue Harbour, however, does not see the two as being mutually exclusive.
(L to R) Afsaneh Mashayekhi Beschloss, Clifton S. Robbins, and Dr. Rajiv Shah during a panel discussion at the 2019 Delivering Alpha conference on Sept. 19. 2019.
Adam Jeffery | CNBC

Several investors have been wary of incorporating environmental, social and governance standards into their strategies. However, two investors think increased attention to ESG will be the best way to improve returns.

Afsaneh Beschloss, CEO of The Rock Creek Group and Clifton Robbins, CEO of Blue Harbour Group, advised investors about the importance of ESG in their portfolios. Blue Harbour reportedly managed more than $3 billion in assets through 2017. Rock Creek reportedly managed over $12 billion.

"Long-term value investing is based on taking the whole set of stakeholders," Beschloss said Thursday at the Delivering Alpha conference presented by CNBC and Institutional Investor. "Shareholders are important and will always be incredibly important, but their highest returns will come if a company is good in its management, if a company is sustainable and has good governance."

"If you really think about it and are interested in the highest returns, this is the best way to go about it," Beschloss said.

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The popularity around ESG investing, which refers to making investments that could lead to a positive impact in society, has grown in recent years. In 2019, so-called sustainable funds saw record inflows, according to Morningstar data. Yet some investors are apprehensive about incorporating these principles in fear of missing out on potential profits.

Robbins of Blue Harbour, however, does not see the two as being mutually exclusive.

"It's a mistake to think this is concessionary of returns," Robbins said. "An obvious example to us has been about the culture of a company. There's a great correlation between a company with good culture and profits. If investing in a company that is inclusive, cares about its employees and is a good to work in, they're going to stay in their job and do better."