The world of investing is changing, with new investors looking at how they can achieve both acceptable returns and build a better world with their money. Audrey Choi, Chief Sustainability Officer and Chief Marketing Officer at Morgan Stanley, provides some insight on this trend, drawing on a recent survey, Sustainable Signals.
Tim Nixon, Managing Editor, Sustainability: From the survey, we hear that values and impact are increasingly relevant to how Millennials would like to invest. What kinds of investment vehicles actually deliver impact these investors can measure?
Ms. Choi: The range of investment vehicles available to investors who are looking to integrate sustainability into their investment practices is wide and growing. According to US SIF, more than $8.7 trillion in US assets under management now consider environmentally and socially responsible factors, which is more than 1 in 5 dollars under professional management.
Fixed income vehicles such as green bonds are gaining traction with corporate and municipal clients. Last year, Morgan Stanley led a $500 million green bond for Starbucks that is supporting sustainable coffee farming across the company’s supply chain.
Many investors are also attracted to socially responsible mutual funds, ETFs, and other pooled products. US SIF reports that in 2016 there were more than 1,000 investment funds incorporating ESG factors, worth almost $2.6 billion.
And financial advisors are getting much more sophisticated when it comes to helping clients meet their own impact goals. We recently launched an in-depth sustainable investing e-learning program for our 16,000 financial advisors to help them work with clients to navigate the range of options for integrating sustainability into their portfolios.
Tim: Is Morgan Stanley developing new options which allow for easier integration of values investing and even spending into the everyday life of investors?
Ms. Choi: Absolutely. Our Investing with Impact Platform now has more than $6.3 billion in assets under management and offers wealth management clients more than 140 investment products that aim to deliver positive environmental and social impact alongside market-rate returns. We offer custom client solutions that include restriction screening, ESG integration that more proactively considers ESG criteria, thematic exposure that helps investors invest in sectors that solve sustainability challenges, and impact investing that targets specific social and environmental outcomes.
Earlier this year, we introduced two new sustainable model portfolios to the Investing with Impact Platform that have reduced account minimums of $10,000. Our hope is that the democratization of sustainable investing will open the door for new investors, including Millennials, to integrate values into their investments more easily.
In May, our Investment Management team launched its first global impact fund, PMF Integro Fund I. The $125+ million fund invests in private equity funds that have the potential for compelling financial returns while achieving positive environmental and social impacts.
At the Institute for Sustainable Investing, we work across Morgan Stanley’s business to provide our diverse client base a range of options for integrating their values into investment activity.
Tim: What percentage of 401ks actually offer an ESG option? How many offer an ESG option which is more than just negative screening of undesirable sectors?
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