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Sustainable Investing: The Challenge for Investors

The Top Papers on Sustainable Investment Approaches

The objectives outlined within the U.N.'s SDGs have brought about an unprecedented challenge for the institutional investment community - namely, how can assets be invested in a sustainable manner?  Different investors have different opinions.  For instance, MFS recommends looking at US large cap growth stocks due to their lower carbon footprint, while NNIP contends that limiting one's investment universe to large caps excludes a large number of impact-oriented small cap companies with other positive attributes. 

The papers below discuss ESG integration, strategies centered around climate risk awareness, green bonds, sustainable ETFs, and other approaches to sustainable investing.   

sustainable plant


A More Traditional Approach to Low Carbon Investing (MFS, 2019)

MFS Investment Management looks at the components of the global carbon footprint and the prevalence of environmental risks, recommending that carbon-conscious investors consider the US large-cap growth universe.

The EU Taxonomy: Sustainability Metric for the 21st Century (BNP Paribas AM, May 2019)

The EU taxonomy is a part of the European Commission's 10-point action plan on sustainable finance. It lists all of the economic activities that are considered to be environmentally sustainable.

Invest in the ABCs of ESG (Intech, 2019)

For compliance reasons, this paper is only accessible in certain geographies

Intech delves into the heirarchy of ESG issues, the four basic approaches to ESG investing, and ESG megatrends such as income inequality, climate change, and corporate leadership.

Sustainability Inside book (Robeco, 2019)

Sustainability Inside is a 70-page book from Robeco that takes an in-depth look at ESG integration, approaches to sustainable investing (including research and surveys from RobecoSAM), engagement practices, and relevant quantitave techniques.

The challenge of investing sustainably in sovereign debt (Fidelity Intl, Apr 2019)

For compliance reasons, this paper is only accessible in the UK & Europe

How is it possible for investors to engage with governments on sustainability-related issues? While much more difficult than engaging with corporate entities, sovereign engagement can lead to cheaper financing, as well as other positive outcomes.

Five Building Blocks For Impact Management (Franklin Templeton, 2019)

For compliance reasons, this paper is only accessible in the EMEA region

Investors can build impact management systems that are aligned with best practices and mesh well with their strategic focus. This paper provides an overview of frameworks and tools that are available to impact investors.

FocusPoint: Bigger and Better Impact Universe (NNIP, 2019)

There may be a surprisingly large number of stocks that have a positive impact, if the universe of examined companies is expanded so that it includes small caps. NNIP looks at the CFROI of these companies.

ESG Investing - Sustainability becomes systemic (Manulife, Feb 2019)

For compliance reasons, this paper is only accessible in the EMEA region

Active managers who go above and beyond in the depth of their ESG analysis may be able to use this to differentiate themselves and add value for clients in a time where financial data is increasingly ubiquitous.

An Investor's Guide to Responsible Investing (Aon Hewitt, 2018)

Aon Hewitt introduces responsible investment practices and elucidates a process for introducing non-financial ESG data into a more fundamental financial analysis.

A View of the U.S. Sustainable Funds Landscape (Morningstar, 2018)

Investors have more choices than ever to invest in open-end and exchange-traded funds that practice sustainable investing.

Sustainable investment AUM has reached US$31 Trillion (FTSE Russell, Apr 2019)

This FTSE Russell infographic covers sustainable investment innovation from 2001 to 2018, including country-specific policies, regulatory changes, and trends.

Green bonds: Sustainable opportunities in public fixed income (Eaton Vance, 2019)

Investors are increasingly seeking to apply a responsible investment lens to fixed income portfolios. Bonds often allow capital to be directed towards specific projects, which is a boon for impact-oriented investors.

Video: Sustainable Investing integration and trends in Europe (FTSE Russell, 2019)

Aled Jones discusses sustainable investment integration, specifically how clients can integrate climate change probabilities into portfolios. He also covers the recently launched FTSE EPRA Nareit Green indexes.

Mainstreaming Sustainable Investing (CFA Institute Research Foundation, 2018)

There are many different ways to approach sustainable investing due to the wide range of motivations that clients have for achieving certain outcomes, the proliferation of investment strategies, and the ESG systems that are capable of implementing them. This CFA Institute Research Foundation paper discusses mainstreaming SI, not through recommending a particular approach, but via integrating ESG practices into the traditional investment process.

How and Why to Invest in a Climate Change Strategy (White & Grantham, GMO, 2019)

Climate change strategies can provide diversification, protection form climate risk, inflation protection, and other benefits, but how should a climate change strategy be positioned within a broader investment portfolio?

Rethinking Impact to Finance the SDGs (UNEP/IMPACT, 2018)

How do we go about financing the USD 5-7 trillion needed to annually fund our pursuit of the UN SDGs? This report looks at practical ways for the public and private sector to work towards closing the gap.

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