A Q&A with Audrey Choi, CEO, Morgan Stanley Institute for Sustainable Investing
Friday, May 1, 2015
An important question in the field of sustainable investing is whether or not there is a performance trade-off if you start to consider ESG (environment, social, governance) factors in your investment portfolio, as if “doing good” somehow doesn’t give you the same kind of financial returns from traditional investing.
There hasn’t been much number-crunching analysis to figure out if there really is a trade-off if you want to make a positive impact with your investments. But thanks to a new report from Morgan Stanley, we now know that this perception is actually a misperception.
In fact, not only does sustainable investing not require a financial sacrifice, the opposite is usually true. According to Morgan Stanley, “sustainable investing has usually met and often exceeded the performance of comparable traditional investments, both on an absolute and risk-adjusted basis, across asset classes and over time.”
Produced by the Morgan Stanley Institute for Sustainable Investing, “Sustainable Reality: Understanding the Performance of Sustainable Investment Strategies” examines sustainable investing and performance and shows that while 54 percent of investors believe sustainable investing involves a financial trade-off, this is not the case.
Analyzing the performance of more than 10,000 mutual funds over the past seven years, the analysis found that sustainable equity funds met or exceeded median returns of traditional equity funds during 64 percent of the time periods examined.
In addition, the report found that sustainable equity funds met or exceeded median returns for five out of the six different equity classes examined.
I had a chance to talk to Audrey Choi, CEO of the Morgan Stanley Institute of Sustainable Investing, about the report’s findings and her thoughts about the current state of sustainable investing.