A focus on sustainability can help make portfolios more resilient. We believe the adoption of sustainable investing is a tectonic shift that will carry a return advantage for years to come – and the coronavirus shock seems to be accelerating this shift.
A commonly held view is that a return sacrifice is needed when adopting sustainable investing. We disagree – and in fact believe the opposite is true.
We believe there is a fundamental point that is often overlooked with sustainable investing. There will likely be long transition unfolding over years and decades, driven by investment flows, that will reshape all asset prices. Because these flows are in their early stages, we believe that the full consequences of a shift to sustainable investing are not yet in market prices – and a return advantage can be gained during this transition.