Clear intentions and transparent actions support ESG alignment with institutional clients

To ensure durability and sustainability in the institutional markets, all participants — from clients to asset managers, financial professionals and solution providers — should adopt both financial and environmental, social and governance (ESG) objectives with a long-term view. With many institutional investors using an ESG lens when they select and work with asset management and financial firms, they are interested both in how their asset managers incorporate ESG investing and how the firms themselves are committed to ESG principles.

Despite the current challenges of the market environment, with rising inflation and economic uncertainty, the commitment and interest in sustainability persists among institutional clients who aim to be well positioned for the long-term, said Keith McDonagh, head of Institutional Solutions at Massachusetts Mutual Life Insurance Company, or MassMutual. “It’s the connection between the long-term durability of a business and the long-term durability of the society in which we live, operate and run our businesses.”

“When you think about ESG principles, you’re thinking about the long-term impact for the business, whether that’s related to the environment, related to equity and inclusion or all the other aspects of ESG,” McDonagh said. These objectives are increasingly significant for MassMutual’s institutional clients who want to learn more about the firm’s commitment to ESG both as a company and as a financial solutions provider, he said. Top themes include climate change and achieving net-zero carbon emissions as well as diversity, equity and inclusion.

Mutuality at the core
For MassMutual, a 171-year-old life insurance company that has customers, members and participating policyowners, mutuality is a core value, McDonagh said. “When you have relationships that can last decades into the future, you want to ensure that your company and the promises you provide last not only today and tomorrow but well into the future.”
“The other element of mutuality is collectively pooling together to help each other for long-term financial well-being,” he said. “There’s an inherent alignment between mutuality and sustainability because both are focused on excellence over the long-term.”
This mindset informs the firm’s approach to sustainability, McDonagh said, which includes goals related to environmental stewardship, social responsibility and good governance. MassMutual has embraced these tenets of ESG within its investment portfolio and throughout its operations.
Many institutional clients today are seeking an alignment of shared interests with their industry partners, he pointed out. “Are those alignments of interests on shared ESG principles? Are they on complementary ESG goals and objectives within the investment portfolio? And do they deliver long-term value creation?”

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