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3 Minutes to Read (Reuters) – LONDON (Reuters) – HSBC Asset Management, the fund arm of Britain’s largest bank, announced on Thursday that it will buy a minority investment in RadiantESG, a women-led asset management start-up based in the United States that focuses on environmental, social, and governance issues. PHOTO FROM THE FILE: On March 3, 2016, the HSBC bank logo is seen in London’s Canary Wharf financial area. Reinhard Krause/REUTERS In response to long-standing criticism that the business is not diverse enough, a number of US endowments and public pension schemes have vowed to spend more money with firms owned by women or minorities. RadiantESG, which will rebrand as RadiantESG Global Investors, was founded by former Rosenberg Equities CEO Heidi Ridley and former head of sustainable investment Kathryn McDonald. HSBC stated it will buy up to a 33 percent interest in RadiantESG. The deal’s financial specifics were kept under wraps. RadiantESG plans to launch two strategies later this year, one a wide listed equities strategy focused on global developed and emerging market stocks, and the other a ‘planet-positive’ stock strategy that contributes significantly to the UN Sustainable Development Goals. Both would first target institutional and wealth management clients in the United States, with the goal of later releasing retail-oriented products. McDonald, who spent two decades at AXA Investment Managers’ quant-driven investment business Rosenberg Equities with Ridley, stated that while quant investing had numerous advantages, the firm couldn’t rely on it totally due to the lack of ESG data from corporations. “We have to be honest with ourselves and admit that quantitative approach isn’t enough… we need to balance it with our own human judgment.” The partnership with HSBC, which oversees $621 billion in assets, will help the company to scale quickly, allowing it to capture a larger share of institutional money eager to invest in women and minority-led firms, according to Ridley. In 2019, the Kresge Foundation announced that by 2025, a quarter of its U.S. assets under management would be invested in female- and diverse-owned businesses. While a handful of such companies have emerged in recent years, the vast majority are still small, with an operating infrastructure that makes it difficult for them to raise funds from larger institutions. “We’d rather give up some stock and collaborate with a firm that can assist us achieve those objectives and truly address some asset owner concerns about operational and going concern risk, so we can hopefully speed our path to growth,” Ridley said. According to a 2020 report by the Diverse Asset Managers Initiative, only 1.4 percent of the $69 trillion in assets in the United States is handled by diverse-owned enterprises. Simon Jessop contributed reporting, and Elaine Hardcastle edited the piece./nRead More

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