Hotter earth drives sustainable funds
This year is on pace to be one of the hottest on record, and the trend may accelerate as President Donald Trump loosens policies meant to combat climate change.
That’s left some investors angry, while others see dollar signs. There are big, potential losses to be avoided by investing with an eye toward environmental issues.
Anyone who avoided PG&E stock, for example, wasn’t hurt when the California utility filed for bankruptcy protection amid mountains of potential liabilities due to wildfires that devastated northern California.
That’s one reason demand is growing for funds that consider environmental, social and governance issues, known as “ESG” investments, says John Streur. He is chief executive officer of Calvert Research and Management, one of the largest families of responsibly invested mutual funds.
Is climate change the No. 1 thing on the mind of investors coming to Calvert?
It’s been the No. 1 issue for a period of time, and it’s attracting more attention and rigor. So much information, aside from Trump, is becoming available about the risks to physical assets, the risks in terms of conducting their business during severe weather events, risks associated with wildfires.
Five years ago, people thought this was something that the next generation was going to deal with. Today, they realize this is something we have to deal with right now.
You wrote something recently highlighting recent comments by the president of the Federal Reserve Bank of Dallas, about how Texas may not be the place where ESG investing is most welcome. Are your investors all along the coasts?
What we’re finding around the country is people who might not have come to this form of investing previously recognize that these issues really matter to the long-term success of the companies they invest in. And that’s bringing everybody to the table. While in the past, you might have said this is coastal, or this is liberal, that’s just not the case anymore. Institutions, as well as individuals, from every background around the country are sitting up and taking notice that their portfolios need to be managed in a way that deals with these risks and, in some cases, opportunities.
How about the companies you invest in: Have you found them to be more open to talking with you about environmental and other issues?
Companies are much more receptive. We’ve even got some companies proactively coming to us, where we are beginning a dialogue.
Is that because your funds can hold their investments for a long time?
I think with ESG engagement, done the right way, you’re really facilitated by being a long-term investor. You can’t engage with a company if you’re going to sell the company in three months.