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Sustainable Investing: Current Trends – by Kai Kato | Sustainable San Mateo County

Sustainable Investing: Current Trends – by Kai Kato

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Rev. Kirsten Snow Spalding of Ceres, the guest presenter at Sustainable San Mateo County’s Virtual Happy Hour on August 27, said current trends influencing sustainable investment include fossil fuel divestment from individual portfolios, engaging with heavy-emitting companies to move them to become more sustainable and focusing on private equity.

 

Rev. Spalding is Senior Program Director, Investor Network, at Ceres. In this capacity, she engages with a network of over 175 institutional investors with more than $30 trillion in assets under management. Investors in her network include insurance companies, university endowments, banks and pension funds.

 

As Rev. Spalding sees it, there are two main components of sustainable investment. First, investors can engage the companies with which they already have investments to push them to become more sustainable. Second, investors can add sustainable companies or industries to their portfolios. She said that water pollution, climate change and social inequity are examples of issue areas to consider when choosing sustainable investments.

 

Rev. Spalding identified three key trends in sustainable investment:

 

Fossil fuel divestment. This recent movement is attractive for individuals since it allows them to align their finances with their values. Rev. Spalding often tells her church community to make sure their money reflects their views.

Engaging with heavy-emitting companies. Investors are using their power to move these companies in a more sustainable direction. Initiatives such as Climate Action 100+, representing roughly 500 investors, are seeking to push the world’s largest greenhouse gas emitters to reduce emissions and be transparent with their disclosures.

Shifting where money is going. Historically, publicly traded corporations have been the focus of socially responsible investments. However, today many companies are staying private longer, leading investors interested in sustainability to turn to private equity. These types of investments may be riskier, but they offer a way to directly influence business operations.

 

Rev. Spalding recommended that everyone look closely at their retirement funds. Some pension funds create recurring sustainability reports to be transparent about their sustainability efforts. Others take no such action.

She suggested that individuals talk to their pension fund managers to ask about their sustainability efforts and push those pensions to engage with the companies they are invested in. She also explained that the more pension managers hear what the people want, the more they will pay attention and pursue sustainable practices.

 

After Rev. Spalding’s talk, the more than 40 attendees at the virtual gathering broke into discussion groups to talk about where we see opportunities, barriers and risks for sustainable investments in San Mateo County and beyond.

 

One group discussed bringing up the need for sustainable investment with SamCERA, San Mateo County’s pension fund. The group also talked about the pitfalls of negatively screening out funds with “harmful” elements, as one might quickly run out of publicly traded companies to invest in. Another group echoed those sentiments, emphasizing that “the perfect should not be the enemy of good.” It may be difficult to get the “perfect” investment portfolio, but there are ways to make sure investments align with personal values. Fossil fuels may be the red line for some, for others, it may be some other factors.

 

Others brought up the problem of inequity in the investment world, asking how people with less money could invest sustainably. They were curious about opportunities to pool resources together to invest in a community-oriented strategy.

 

One participant brought up the idea of investing in EV charging infrastructure. Rev. Spalding supported this idea, believing it to be an investment opportunity that mirrors how the biggest investors are telling companies to electrify their fleets.

 

Overall, a common thread throughout the discussions was the desire to learn more about sustainable investment. Some participants cited a need for greater access to information on how to invest sustainably and what others are doing. Sustainable San Mateo County plans to continue this conversation. We thank Monica Siebert, SSMC’s long-time communications volunteer, for helping to frame and moderate the session, and our interns, Kai Kato and Calista Triantis, for their contribution. 

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