Features
Sustainable investment needs to be ‘core to how we live our lives’
Joe Keefe, president and CEO of US firm PAX World Management, has written a piece for the Huffington Post about the importance of sustainable investment in all aspects of life.
Speaking about investment in fossil fuels, Keefe says there are three general approaches: to continue to invest (A), to fully divest (B) or to partially divest, but favour those companies with the strongest commitments to changing (C).
He describes approach A as “unsustainable and irresponsible”, adding that it “effectively aligns investments with those who deny the science on climate change or actively resist efforts to address it.”
He expresses concerns about approach B, which he says is being used by environmental campaigner Bill McKibben and 350.org, who are calling for complete divestment from fossil fuels: “we are not convinced that these large multi-national companies will miss, or perhaps even notice, the small sliver of capital that is withdrawn.”
Keefe adds that by divesting completely, investors will also lose their right to attend annual general meetings.
Approach C, he says, is seen as the most practical by sustainable investors: “a best-of-class approach – screening out the worst polluters while investing in companies that have made larger commitments to renewable energy – is coupled with shareholder engagement to prod energy companies to further reduce their emissions.”
Keefe concludes by saying it is not up to governments and policymakers to act; instead investors hold the key to ensuring a sustainable financial future.
“Sustainable investing needs to be a core component of any comprehensive strategy to address climate change”, he says. “I dare say it needs to be a core component of the way we live our lives.”
Further reading:
Do ethical funds and fossil fuels mix?
Harvard finance arm creates sustainable investment role
Investment reports reveal widespread use of ESG integration
‘We need investment that prioritises long-term wellbeing for people and planet’