Dear EarthTalk: Are climate change and other environmental issues affecting or informing mainstream (Wall Street) investment strategies, or is sustainability-oriented investing still just a do-gooder niche?
—Mary S., New York
It wasn’t long ago that so-called “triple bottom line” investing —factoring in not just financial returns but also social and environmental impacts —was purely the domain of a small set of outliers willing to forego profits for the sake of proving that investing could be used as a tool to drive change. Just two decades ago, the only real way to have an eco-friendly investment portfolio would be to put your money with one of a handful of mutual funds focused on “Socially Responsible Investing” (SRI) —or research and invest in often speculative individual “green” companies directly.
But in intervening years, many investors’ perspectives have changed. It turns out “green” investments are not only safer than their conventional counterparts given the actuarial risks of rampant climate change, but they also tend to perform better. Generation Investment Management (GIM), founded in 2004 by former VP Al Gore and ex-Goldman Sachs exec David Blood, was one of the first well-heeled firms devoted exclusively to sustainable investing —and shocked analysts 10 years in by how profitable they were. GIM’s 12.1% annual average increase over its first decade ranked it second in profitability of over 200 competitors, including many of the biggest names in conventional investing. The lesson is companies prepared for and even poised to profit from a warmer future are most likely to succeed.
A 2019 report by BlackRock, the world’s largest investment firm with more than $7 trillion under management, confirms what GIM’s founders claimed all along: Going green pays. Not only has funding/investment in the environmental, social and governance (ESG) space almost doubled over the last five years, but these investments outperformed non-ESG bets overall. ESG-focused equity benchmarks in the U.S. yielded an annual return of 14.5 percent, compared with 14.4% for non-ESG investments. Meanwhile, globally ESG-based investments also bested non-ESG antes 8.1% to 7.7%.
Perhaps this new reality is why BlackRock recently announced a sweeping new set of policies aimed at making sustainability the “new standard for investing.” The firm plans to launch new active and passively-managed SRI-based funds in the short term and will look into other ways to align the rest of its investments according to its investors’ increasingly pro-environment values.
Environmental advocates are glad to hear about BlackRock’s plans, especially given the need for the private sector to step in and take an active role in carbon drawdown in lieu of federal action. Ben Cushing of the nonprofit Sierra Club considers BlackRock’s shift “a major step in the right direction and a testament to the power of public pressure calling for climate action.”
But he would like to see BlackRock —still the world’s largest investor in coal, oil and gas —go a giant step further and divest entirely from fossil fuels. “BlackRock should expand on its commitments and other financial institutions should follow suit.”
Get local stories you won’t find anywhere else right to your inbox. Sign up here
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
