United States, Institutional
Change
The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
Key Points
- Sustainable investing can help organizations align their investments with their values while still earning potentially strong returns.
- Such strategies may provide an edge for attracting donor dollars and help family office principals engage with socially minded individuals.
- We believe understanding market inefficiencies and determining how to take advantage of them is how we can add value for our clients.
FOR MISSION-BASED ORGANIZATIONS, sustainable investing can be a differentiator that increases donor appeal, enhances positive societal impact, and adds attractive return potential to an investment portfolio. In conversations with nonprofits, including community and private foundations and endowments, as well as family offices, we are increasingly asked to provide insight and perspectives on this segment. In this paper, we cover the evolving landscape, introduce five related market inefficiencies, and offer thoughts on incorporating these approaches into a portfolio.
Wellington has nearly 50 years of experience with sustainable investing and integrating environmental, social, and governance (ESG) research and engagement into our processes. While our various strategies differ in philosophy and objective, they all aim to deliver competitive, “non-concessionary” investment returns. We do not believe investors need to sacrifice return potential when investing sustainably. In fact, we are of the mind that “sustainable” assets will increasingly become meaningful sources of investment alpha as markets ascribe more value to them.
The transition toward a low-carbon economy and strong investor interest in these solutions will likely raise the cost of capital for companies that fail to become more sustainable and lower the cost of capital for those that do. Our goal is to understand the themes and trends that support a sustainable future, recognize where market disruptions are occurring, and make investments in the best interests of our clients.
Potential benefits
As active investors and fiduciaries for our clients, Wellington aims to deliver competitive returns by applying deep research and a collaborative approach to identify investments that we believe will outperform markets and avoid those that may lag. In our view, sustainable strategies have the added benefit of offering clients the opportunity to align their investments with their values while still earning potentially strong returns. Mission-based investors now have a powerful new…
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