The vast majority of invested assets (approximately US$150T) do not consider environmental, social or governance (ESG) factors. Socially responsible investing (SRI) emerged to address these challenges, but it remains largely deployed in "negative strategies" such as sector screening, and continues to be a small investment niche, largely due to perceptions about potential underperformance.
Sustainable investing is a new, more positive investment construct, described as "an investment discipline that explicitly considers future social and environmental trends in financial decision making, in order to provide the best risk-adjusted and opportunity-directed returns for investors. By anticipating these trends ahead of the market, sustainable investing seeks to identify 'predictable surprises' that can help maximize value over the long term."
This concise guide by one of the sector's leading experts:
Disentangles the terminology around SRI and describes a new, positive, opportunities-oriented paradigm for sustainable investing
Showcases funds and strategies that are delivering outperformance within ecological limits
Sets out the key megatrends and scenarios which investors need to consider, and
Offers a practical guide to constructing a sustainable portfolio.
This is absolutely essential reading for investors, fund managers and analysts who need to get up to speed on sustainable investing.
1. The challenge of a sustainable future
2. A very short history of SRI
3. Best practices in sustainable investing
4. Megatrends in sustainable investing
5. Scenarios and pathways: Implications for investors
6. ESG factor specifics and other trends to consider
7. Steps to consider in constructing a sustainable portfolio
CARY KROSINSKY is Executive Director of the Network for Sustainable Financial Markets, an international, non-partisan network of finance sector professionals, academics and others who have an active interest in long-term investing.