A Blueprint for Sustainable Investing
By Michael Schweibinz
A new age of financial analysis is upon us—an age that poses both challenges and opportunities to the 21st century investor.
Today, institutional investors and investment managers must “understand and manage the growing risks posed by climate change, resource scarcity, population growth, human and labor rights, energy demand, and access to water,” according to the new Blueprint for Sustainable Investing from Ceres.
The Ceres Blueprint provides “10 action steps for integrating sustainability into investment philosophies, asset allocation strategies, corporate engagement, proxy voting, and other areas.”
Ceres is working to change traditional investment behaviors. “The financial risks of climate change and other sustainability threats will have profound effects on investment returns in the years to come,” explains Ceres president, Mindy Lubber. “Yet the traditional methods of financial analysis used by most large investors ignore these factors.”
The Blueprint identifies 10 Action Steps aimed at institutional investor governing boards:
- Establish a commitment to sustainable investment though a Statement of Investment Beliefs
- Establish board level oversight of sustainability policies and practices
- Identify sustainability issues material to the fund
- Evaluate asset allocation for material sustainability risks
- Select an investment strategy and integrate sustainability criteria
- Require sustainable investment expertise in manager and consultant procurement
- Evaluate manager performance against sustainable investment expectations
- Establish corporate engagement strategies and proxy voting guidelines consistent with sustainable investment goals
- Support policies and market initiatives that promote a sustainable global economy
- Integrate sustainable investment criteria across all asset classes and strategies
This report provides comprehensive evaluation methods for “trustees, fund managers, and consultants entrusted with meeting obligations to beneficiaries over multiple generations.” It offers both a “business case for sustainable investing and a soup to nuts range of strategies that reflect the latest thinking on this important issue.”
Each of the ten steps helps investors evaluate “how their core investment policies and practices support sustainable risk-adjusted returns.” In essence, it’s a blueprint for investing, and for life.
Mention of specific companies or securities should not be considered a recommendation to buy or sell that security. Past performance is no guarantee of future results.
Posted: August 21, 2013