Why I Became a Sustainable Investor
I’ve been in the investment industry for 40 years, and an advisor in Santa Fe for 25.
I learned my trade working on Wall Street during a time when the received wisdom was that socially responsible investing required sacrificing financial return for the sake of values. The job of advisors, so the thinking went, was to remain neutral on issues, and leave it to our clients to do good works with their investment gains if they chose to.
It wasn’t until my fifties that I questioned this dogma.
A lot had changed in the meantime. The climate crisis became undeniable. Record heat, rising seas, fires, floods, drought, and mass migration, drove home the point every day. I asked myself what I, as an individual, could do?
I was increasingly convinced that the old Wall Street stance of neutrality on ethical issues was inadequate to the challenge at hand. If anything, silence on climate change made me complicit with an economic and political system that was driving our one and only planetary home to ruin.
Sustainable investing had also matured into a burgeoning movement. With that evolution, a wide array of new sustainable investment funds came to market covering almost every sector one might choose to invest in.
Moreover, the sustainable investing industry, which was in its infancy in the early 1980s when I became a professional, had forged a track record which proved that investing responsibly did not require accepting substandard returns.
On the contrary, sustainable versions of several major benchmarks like the S&P 500[1] and MSCI All Country World Index[2] have outperformed their conventional counterparts in recent years.
While past performance is no guarantee of future results, the use of environmental, social, and governance criteria (or “ESG”) in stock selection–in combination with traditional financial measures–has helped investors identify better-managed companies while avoiding riskier and lower quality competitors.[3]
And then there were my kids. Almost a decade ago my ex-wife came down to the kitchen late one night to get a drink of water. She found our older daughter, who had recently returned home from college, sitting on the floor with her head in her arms, sobbing. Thinking something terrible had happened, she wrapped her arms around her.
Our daughter confided that she had always wanted to have a family, but she doubted whether she could in good conscience bring children onto a planet facing climate change, mass extinctions, and the war and social chaos that would likely follow.
From the time my children were born I’ve looked forward to being a grandparent. The thought that this might never happen because we have so devastated the world we leave to the next generation, hurt.
I began attending conferences on sustainable investing, talking to colleagues and researching funds. The data proved I could fulfill my fiduciary obligation to clients while helping them align their investments with sustainable values. The more I learned, the clearer the path forward appeared.
Sustainable investors employ a variety of strategies. Divestment from industries that by design or through use of their products harm people or the planet is one strategy. Think fossil fuels, weapons, tobacco, or private prisons.
Exercising the power of shareholders to improve corporate disclosure and business practice through engagement and proxy voting is another approach.
Investing in companies that solve urgent problems in fields like renewable energy or water treatment is a third.
Over the past ten years my business partners and I have fundamentally changed our investment practice by employing a combination of these approaches, while also becoming a certified B Corp. This transformation, and the positive energy it has unleashed among our clients and employees, has been the biggest and most satisfying shift in my career.
Responsible investing will not solve the world’s problems, but it is an effective tactic we can deploy to help transition to a sustainable economy. In our culture money is power, and power doesn’t belong only to politicians and corporate executives.
As investors, we have access to an important lever of change. As elders, it’s our responsibility to do everything we can to leave our children a livable planet.
This material is intended for education purposes only. LongView Asset Management, LLC (referred to as "LongView") does not warrant that the provided information will be free from error. None of the information provided is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon for transacting securities or other investments. Under no circumstances shall LongView be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the materials provided. In no event shall LongView Asset Management, LLC have any liability to you for damages, losses, and causes of action for accessing this commentary. Past performance is not indicative of future results. This content not reviewed by FINRA.
Photo by Noah Buscher on Unsplash.
1. https://www.spglobal.com/spdji/en/research/article/charting-new-frontiers-the-sp-500-esg-index-s-outperformance-of-the-sp-500/
2. https://www.msci.com/indexes/index/700713
3. https://www.cmegroup.com/openmarkets/equity-index/2024/Why-the-SP-500-ESG-Index-Continues-to-Outperform-the-SP-500.html