INVESTING IN A GREENER TOMORROW: SUSTAINABLE + ECO-FRIENDLY INVESTING
BY DAKOTA PARKS
S
ustainability is sweeping across the globe, changing the way we live, travel, shop, consume—and invest. As social and cultural consciousness toward protecting the environment and natural resources thrives, so too does the demand for green investing. Sustainable investing, often called impact, green or eco-investing, puts environmental sustainability at the forefront of investment strategies and portfolios. Since 2012, sustainable investment assets managed in the U.S. have more than tripled from $3.7 trillion in 2012 to $17.1 trillion at the beginning of 2020, according to the Forum for Sustainable and Responsible Investment’s 2020 trends report. This surge of assets not only accounts for 33 percent of total U.S. assets under management but also demonstrates the global forces changing the future of investments.
26 | Business Climate | 2021 / 2022 Annual Real Estate
For Jacey J. Cosentino, a financial advisor for the RadcliffSchatzman Group at Morgan Stanley, her focus on sustainable investment solutions allows her to help clients align their core values with the way they invest and grow wealth. It was this shift toward what she describes as compassionate capitalism that supports causes like climate change mitigation, diversity and inclusion, social equity, food and water scarcity and cruelty-free investing that first interested Cosentino in sustainability back in 2012. “Sustainable investing can incorporate a theme, like climate change mitigation or social equity, or even screen out certain investments like fossil fuels, tobacco or companies that have had human rights violations,” Cosentino explained. “For me personally, I want to support companies that have fair wages, non-discrimination policies in place, methods in place to lessen the damage to our environment, waterways and communities or implement processes that remove negative impact to our environment all together.”
Climate change mitigation and legislative policies like the Paris Climate Agreement in 2016 and global leaders setting goals to eliminate greenhouse gas emissions are some of the driving forces to the rise in sustainable investing. As more and more people embrace a green lifestyle, they want to support companies and investment opportunities that promote a healthy environment and future. Financial advisors, like Cosentino work with analysts to choose investments that consistently score high on Environmental, Social and Governance (ESG) metrics. The ESG categories can be broken down into the three pillars: Environmental criteria considers how a company performs as a steward of nature, which might include action on climate change or greenhouse gas emissions and reductions; Social criteria examines how a company manages relationships with employees, suppliers, customers and the communities where it operates, which includes labor standards and health and safety; Governance criteria explores a company’s leadership, executive pay, audits, internal controls and shareholder rights to include anti-corruption measures or tax transparency. “Companies that focus on sustainability are less volatile and score higher on ESG metrics,” Cosentino elaborated. “Whether its fixed income, equities, private equity, REIT’s, or alternative investments, we have options to build out portfolios that echo the changes you want to see in the world.” On a presentation co-hosted by local organizations 350 Pensacola and Healthy Gulf, called “Climate Change Investment Opportunities: Decarbonizing Your Portfolio,” Cosentino discussed how companies are pledging to decarbonize in an effort to reduce global greenhouse gas emissions,