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Brown Advisory – The Changing Priorities of Investment

Consideration of the future is a central tenet of investing, with a growing investor base that prioritises issues like sustainability and diversity, firms need to ensure that they are evolving to take such priorities into account.

Brown Advisory is an international investment firm that prioritises and advises on the sustainable values of its clients. The firm’s CIO for Sustainable Investing, Erika Pagel is quick to point out that “sustainable investing means different things to different people” and so Brown Advisory has a threefold approach to sustainable investing: performance, alignment and journey. Performance involves the belief that integrating Environmental, Social and Governance (ESG) principles can drive returns, leading Brown Advisory to look for companies with sustainable advantages. Alignment is where the firm works with clients to identify a sustainable purpose or mission, and journey involves implementing a portfolio while monitoring further progress.

The firm has a lot of experience in the area of sustainable investment, as Pagel explains: “Brown Advisory has been working with clients on sustainability really since we were founded and, as a result of client interest, we have increased our expertise around the firm. We have solutions at Brown Advisory for both equities and fixed income. We do a lot of due diligence on managers outside of Brown Advisory across asset classes and we have a robust offering for private equity and alternatives.”

When it comes to investment management the client becomes the focus, and this is no different when sustainability is involved. Through working directly with their clients, Brown Advisory is able to craft a bespoke portfolio based on the client’s priorities. This focus means that, while the firm will track the financial performance of an investment, there will be tracking of a non-financial nature to ensure that the client’s mission and purpose are proving successful.

A further facet of Brown Advisory’s work with sustainability is the acknowledgement that such work affects the wider industry. This is why the firm meets with over 150 managers outside the firm on an annual basis, with other meetings occurring more regularly; this is in order to get a sense of how the wider industry is integrating sustainability.

With increasing demand from their client base for sustainable investment, Brown Advisory are ensuring that they are in a position to offer clear advice while understanding that there is more to be done regarding risk and exposures with sustainability in mind.