Over the last few years, we’ve seen the conversation around ESG in investment management shift substantially. Increasingly, we are hearing of managers taking a big step back from ESG initiatives altogether.
But at Castlelake, our beliefs and approach to ESG as a practical component of good investment management remain steadfast. We don’t regard, nor have we ever viewed, ESG as a trend; rather, the consideration of ESG factors and risks has and continues to be a part of Castlelake’s strategy and investment process.
We consider ESG factors and weigh ESG risks because we believe they can have a meaningful impact on capital flows, asset values, and liquidity, and therefore, investment outcomes. Today, we continue to refine the ways in which we integrate ESG into our investment processes so that we can enhance their consistency and integrity.
We are also keenly aware of investors’ increasing interest in asset-based exposure and the capital being formed around the opportunity set. As active participants in the asset-based markets for nearly 20 years, we believe the practical consideration of ESG effects on assets will contribute to differentiation among investment managers over time.
Real assets have a variety of environmental and social impacts, and so we recognize both of those components in our underwriting approach. For example, as a longstanding and experienced aviation investor, we recognize the environmental impact of air travel on a granular level, and we also deeply understand the social benefits it offers to our society. As stewards of our investors’ capital, we believe it is our responsibility to acknowledge both of those dynamics in our underwriting analysis, weighing their risks and opportunities, and pursue investment approaches that strive to balance them.
More broadly, we believe sentiment around ESG factors will continue to evolve in the market, but our experience and asset expertise lead us to conclude that continuing our ESG approach remains appropriate for our investment strategies. With that conviction, we remain committed to a practical approach and continuous refinement.
Evan Carruthers, Managing Partner, Chief Executive Officer and Chief Investment Officer
“We consider ESG factors and weigh ESG risks because we believe they can have a meaningful impact on capital flows, asset values, and liquidity, and therefore, investment outcomes.”
— Evan Carruthers