What Mainstream Means for Sustainable Investing

by Lydia Miller, Senior Vice President, Dana Investment Advisors 

What a year it has been for Sustainable Investing. The year before was noteworthy as well. In fact, a year ago in the GreenMoney Journal, Amy Domini called 2018 “The Year Wall Street Got Sustainable Investing.” BlackRock came onboard, along with a host of major investment banks, and CFA Societies across the country hosted seminars and curriculum on the topic. Evidence for the growth of ESG and SRI assets is supported by the oft-quoted Trends Report produced by The Forum for Sustainable and Responsible Investment (USSIF). In the 2018 edition, the report noted that “1 in 4 dollars of U.S.-domiciled assets” used SRI strategies at the start of that year. ESG and Sustainable Investing broke out with even more supporters in 2019, accompanied by a host of new products. A recent Morningstar article noted that “Sustainable funds are on track to triple” inflows in 2019 compared with 2018. As this decade comes to a close, let’s take a moment to assess the progress and the way forward for ESG Investing.

First, there has been significant progress in identifying and tackling ESG issues. U.S. renewable energy growth has been tremendously strong over the past several years, and supply forecasts for the early 2020s in the U.S. remain robust. Tax credits have helped, and are rolling off, but the economics continue to improve driven by falling prices in solar, wind, and storage. These gains are largely at the expense of coal. Investors have availed themselves of low-carbon portfolios that benefit from improved corporate, science-based carbon emissions targets and focus on exposure in supply chains. Data providers, such as Trucost, have helped in this area, as have efforts by TCFD (Task Force on Climate-related Financial Disclosures) and more. With this growth also come questions of balancing renewables with baseload or intermittency and reliability.

In water-related issues, corporate disclosure, metrics, and target setting have improved significantly. Investors are increasingly aware of the industries and companies with the greatest exposure to water scarcity, quality, and resilience issues, and have a far better awareness of the localized nature of water risks. 

Read Lydia's full article where she answers the question - if “mainstreaming” of Sustainable Investing is the end game, what exactly does that mean for 2020 and the next decade? all at - https://greenmoney.com/what-mainstream-means