Donald Trump ran for office last year on promises to slash environmental rules and other regulations, arguing that their benefits weren’t worth the costs they imposed on business. After his surprise victory, some investors wondered whether the recent growth of so-called sustainable investing would be lopped off like a mountaintop above a rich seam of coal. Surely, they thought, companies that placed a primary emphasis on social and environmental issues would see their stocks suffer.
In the last year there has been a quiet revolution taking place as asset owners have been moving to integrate ESG into index designs for new mandates on core passive portfolios.
Integrating sustainability into investment strategies was a “minority sport” when David Harris joined FTSE 15 years ago. “Over this period, we’ve seen a dramatic change,” said Harris, who is now Group Head of Sustainable Business, London Stock Exchange Group, and Head of Sustainable Investment at FTSE Russell.
A growing number of investors want their investments to align with their beliefs, but making that happen isn’t always as easy as they might hope.
Whether you call it socially responsible investing (SRI), impact investing, values investing, or environmental, social and corporate governance (ESG), it’s all about investing in companies that embrace causes you support, or avoiding companies that profit from practices you don’t like.
Asset managers and institutions invested $8.72 trillion based on SRI principles in 2016, up 33% from 2014, according to the US SIF Foundation, the nonprofit arm of the Forum for Sustainable and Responsible Investment, an industry group that advocates for sustainable investing.