2021 ESG Annual Report

GEORGE H. WALKER Chairman and Chief Executive Officer

Staying Focused After three years of exceptionally strong market returns, and a pandemic that forced businesses to attend to pressing social and environmental issues, some might argue that making the case for environmental, social and governance (ESG) investing has been easy. Now, after Russia’s invasion of Ukraine, those same voices might say that heightened market volatility, inflation and the potential for an economic slowdown will concentrate minds back solely on the near-term bottom line. At Neuberger Berman, our day-to-day reality confirms the truth of the matter: ESG issues so often are the bottom line; and an event like the war in Ukraine is economically disruptive, but it is also an horrendous escalation of environmental, social and global governance risks. The new year has been met with a spate of newspaper articles and investor commentaries arguing that ESG and sustainability is at best a publicity effort and at worst a costly distraction from the real job at hand. We disagree. It’s easy to see the error in these views when, like us, you maintain a rigorous focus on material ESG issues —those that, by definition, represent real risk and opportunity for businesses, and determine environmental, social and financial outcomes. But we believe you get a true idea of the importance of ESG investing only when you look into every brick of the structure that makes positive outcomes possible. I think of this structure as having four pillars: data, integration, engagement and impact.

We believe it is much more likely to achieve real and lasting impact through engagement than through exclusion or divestment.



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