The view that says financial performance must be sacrificed if you consider sustainability when investing is “finally withering away”, according to Joe Keefe, president and CEO of US-based Pax World Management.
Keefe said that while it has taken time, many institutional investors – such as foundations, endowments and pensions funds – that were either not interested in or committed to sustainable investment, are beginning to be interested.
“The old canard, demonstrably false, that sustainable investing requires that one sacrifice financial performance, is finally withering away”, he added.
“At the same time, there are certain emerging demographics, like women and younger investors, who are much more interested in aligning their investments with their values and are therefore accelerating interest in and demand for sustainable investing strategies.”
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Speaking to Blue & Green Tomorrow after the launch of the Pax MSCI International ESG Index fund, Keefe explained that environmental, social and governance (ESG) factors were becoming increasingly relevant to companies’ long-term financial risk and performance.
He said that firms that acknowledge this not only have greater positive impacts on the economy and society, but are also better long-term investments. This includes companies working to confront issues like climate change, gender equality, access to education and water shortages.
“We want to invest in those companies and we want our shareholders to benefit from their vision and their success”, Keefe added.
“Sustainable investing gives investors the opportunity to align their investments with their values while promoting positive social and environmental outcomes in capital markets.”
The company’s newest fund, launched at the end of March, is the 11th offered by Pax World – whose assets under management now exceed $3.3 billion (£1.96 billion). The company launched the first socially responsible mutual fund in the US in 1971, and applies ESG filters to all of its investments.
The Pax MSCI International ESG Index fund will invest exclusively in the MSCI EAFE ESG Index, which covers companies in Europe, Australasia and the Far East, and the minimum investment for individual investors is $1,000. To invest in a US-based fund, individuals from outside the US need a US brokerage account.
Keefe described Pax’s new fund as “an attractive option for sustainable or ESG-oriented investors who want exposure to international developed markets in their portfolios”.
Meanwhile, speaking about the future of sustainable investment, he added, “There is no question that growth capitalism must give way to sustainable capitalism. It’s as simple, and as urgent, as that.
“Over the next 20 years, the sustainable investing industry must play a pivotal leadership role in ushering in this historic transformation. We can also help investors profit from this transformation.
“I think people will increasingly demand that their money be invested in a way that produces positive outcomes rather than problematic ones. And I think they will increasingly realise that sustainable investing is actually a smarter way to invest over the long-term.”
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