Mainstream Financial Firms Embrace Do-Good Investing
(3BL Media/Justmeans) – Sustainable investing has traditionally been perceived as a niche asset class catering only to a select group of wealthy individuals and institutions that want to avoid controversial industries. However, in the last one year, actions of some of the mainstream financial companies are setting a new trend.
Leading financial firms such as BlackRock and Goldman Sachs have launched new investment products that incorporate environmental, social and governance (ESG) factors. Additionally, research from investment experts such as Morgan Stanley is helping dispel investor concerns about financial returns in sustainable investments.
John Streur, president and chief executive of Calvert Investments Inc., said that the year 2015 can be called a transformative year for sustainable investment discipline. Now, with the amount and availability of ESG data, investors do not need to avoid whole sectors based on their values, and can judge companies individually.
Furthermore, the growing body of data increasingly shows that those who want to invest in companies that pollute less, better manage resources or prioritize workers’ rights can do just as well financially as those who do not. According to Streur, it was established in 2015 that those who invest sustainably have got just as good a chance to beat the market.
In October, BlackRock launched BlackRock Impact U.S. Equity Fund (BIRAX), aimed at investors who want to make money in a sustainable way. The fund has attracted $20 million in assets. In July, Goldman Sachs bought Imprint Capital Advisors, an asset-management firm that helps clients create portfolios aligned with their ESG views.
Fiona Reynolds, managing director of the Principles of Responsible Investment, a UN-supported initiative, said that when some of the largest players in the financial services sector take ESG seriously, it sends a powerful signal to the markets. According to Reynolds, investors who have signed on to the initiative manage about $59 trillion, or about half of all institutional assets worldwide, a jump of about 37 percent for 2015.
James Dearborn, head of municipal investing at Columbia Threadneedle Investments, worked with sustainability research firm Sustainalytics to create Columbia U.S. Social Bond (CONAX), a fund launched last year that aims to emphasize the social benefits of municipal bonds. The fund has attracted about $20 million in assets so far, and it is one of the 30 new ESG mutual funds and ETFs launched through October.
Image Credit: Flickr via Overseas Development Institute