Sustainability: An Investment Perspective
The notion of socially responsible investing (SRI) has been with us in some form for a very long time, but as a professional category of investing, it has faced challenges of definition, not least because social responsibility is to some degree a subjective term (as competing political parties are all too willing to demonstrate). Even when we agree on what the goals for SRI ought to be, the other challenge is finding an investment thesis that allows professional money managers to meet their fiduciary obligations and achieve returns sufficient enough to avoid losing clients.
These challenges may explain why the naming convention for this style of investing has migrated from SRI to “ESG investing,” the short name for “environmental, social, and governance” factors, and now, more often than not, “sustainable investing.”
A passionate talk titled “Sustainability: An Investment Perspective” at the 66th CFA Institute Conference in Singapore, delivered by Investment Solutions Chief Investment Officer Glenn K. Silverman, CFA, underscores the emotional appeal of sustainability, which can be broadly defined as “conditions under which humans and nature can exist in productive harmony,” as he put it.
Silverman opened his talk with the disclaimer that “I’ve not been what you’d typically call an environmentalist. I’m no tree hugger. I’m a serious investment guy looking to generate returns for my clients.”