Morgan Stanley and Other Banks Get Serious About Sustainable Investing
Tuesday, August 7, 2012
NO ONE CAN ACCUSE MORGAN STANLEY OF MERELY flirting with sustainable investment products. The April launch of Morgan Stanley Smith Barney’s Investing with Impact Platform and a similarly named firmwide initiative make it one of a handful of banks to institutionalize socially responsible investing.
“Most of the products of this type that we offered previously had come either through client interest in our having those products or from an asset manager partner who had a really compelling product,” recalls Hilary Irby, the brokerage firm’s New York–based head of the Investing with Impact initiative. “We hadn’t systematically gone through and said, ‘If one were trying to invest this way across the portfolio, how would you do it?’?”
No wonder Morgan Stanley is so keen on this growing domain: A 2010 study by the Washington-based Social Investment Forum Foundation found that in the U.S., one of every eight dollars under professional management, or $3.07 trillion, was subject to “environmental or social criteria, policies or screens.” There’s also reason to be optimistic about impact investing, an SRI subset whose proponents sometimes put social good before profit. Although it based its projections on just 1,100 existing deals, a 2010 J.P. Morgan report on impact investing estimated that over the next decade strategies providing five services ranging from housing to primary education could attract between $400 billion and $1 trillion and turn a profit of $183 billion to $667 billion. That would be extraordinary growth for a sector that currently has $50 billion in assets worldwide, according to the Global Impact Investing Network.