Sustainable investing strategies debated

Pleas for sustainable investing are common, but agreement on its definition is not.

This was the conclusion made by Cary Krosinsky, vice president of the international environmental research company TruCost, and Graham Sinclair, an investment strategist at the South African company Sinclair and Company LLC, at a talk Monday held in the School of Forestry & Environmental Studies and sponsored by Dwight Hall’s undergraduate-run Socially Responsible Investing fund. Sinclair advocated for social sustainability, which he said includes alleviating poverty and benefitting living conditions in the developing world. Meanwhile, Krosinsky, who teaches sustainable investing at Columbia University, emphasized that sustainable investing involves a commitment by corporations to environmentalist goals, such as curbing carbon emission rates and eliminating pollutants.

Constance McKee SOM ’86 kicks off a week-long program on biotechnology with a talk on the entrepreneurial angle of scientific innovation.
Cristiana Manole
Constance McKee SOM ’86 kicks off a week-long program on biotechnology with a talk on the entrepreneurial angle of scientific innovation.

Sinclair said companies that practice socially responsible investing worry about three factors: the environment, social justice and governance. And he conceded that they are sometimes at odds with each other, posing the problem of South Africa’s burgeoning coal-burning plants, which, although polluting the air, provide much needed electricity to the country.

Krosinsky said a report for the British government, the Stern Review on the Economics of Climate Change, estimated climate change could wipe out 5 to 20 percent of a developed nation’s annual GDP if companies that work in the nation do not feel public pressure to produce environmentally friendly goods. But Krosinsky admitted that it is hard to determine how one company is more sustainable than another.

“There are few standards,” he said. “It is still the Wild West of sustainability.”

Yet gold lies in this Wild West: Krosinsky said that after his Columbia class compiled a portfolio of companies that they believed were environmentally stable, it was shown to outperform the S&P 500 index.

Meanwhile, Sinclair said environmental sustainability is inextricably connected with social welfare concerns. He explained that global climate change could negatively affect the hungry in Africa by decreasing crop production. Still, Sinclair said Africa is where the great opportunities for future investment lie.

These opportunities intrigued some of the 20 attendees, specifically those from the School of Management. Didi Francis SOM ’11, a South African, said she believes Africa to be a “great opportunity.”

Much of the investment opportunities discussed were for large firms, yet many pressed during the question and answer session for individual tips on how to invest responsibly. Krosinsky suggested that student investors try to exploring unconventional methods of responsible investment.

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