NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, January 18, 2016

The year 2015 might well have been when sustainable investing became sustainable.

Long viewed as a niche asset class catering to wealthy individuals and institutions that wanted to avoid controversial industries such as tobacco and firearms, sustainable investing seemed to turn a corner last year. Mainstream financial firms such as BlackRock Inc.and Goldman Sachs Group Inc. jumped into the fray, launching investment products that take into account environmental, social and governance (ESG) factors. At the same time, research fromMorgan Stanley and others helped dispel concerns that investors have to sacrifice returns to do good.

Yet many challenges remain before sustainable investing is truly open to any investor. One of the biggest is that there isn’t yet one agreed-upon definition of what makes an investment “sustainable.”

‘End of the beginning’

“I think we’re at the end of the beginning, if you will,” says John Streur, president and chief executive of Calvert Investments Inc., one of the original sustainable-investing firms. “We can look at 2015 and say this was a transformative year for this investment discipline. We’ve really turned the corner.”