What is sustainable investing and why is it important for society?
As with many things in the financial industry, there is a great deal of lingo and terminology thrown around and it can leave you quite confused! Sustainable investing essentially refers to any form of investing that integrates Environmental, Social and Governance (ESG) criteria. Less formally put, sustainable investing is about using investment strategies that consider financial returns alongside delivering positive environmental and / or social benefits.
I have been in the field of sustainable and responsible investing for a long time, and I honestly do think we can be too hung up on having a neat, capsule-sized definition. When it comes to individuals, sustainable investing is somewhat a personal reflection of our values and priorities – we are talking about people wanting to achieve something positive with their investments, something beyond just making money.
Sustainable investors look to invest in companies that are getting to grips with the very real sustainability challenges we are facing today – such as growing inequalities, lack of access to basic healthcare, climate change, water scarcity and so on. As a sustainable investor, I want to invest in companies (or funds) that are focused on solving these challenges. For example, climate change may be a real concern to me so I chose to direct my investment capital toward companies delivering low-carbon solutions or funds in the clean energy sector. Or perhaps I am really worried about how local communities are impacted and therefore seek out companies that work hard to protect local workers and employees through their supply chains.
How did you get into green finance?
Green finance sits within the broader sustainable finance world – it’s all about how we shift capital at scale towards our low carbon and climate resilient future. And it is an area of expertise I have developed over the last 12 or 13 years. My journey towards green finance is quite a personal story. I was living in Beijing and I had two very young children. The air pollution in Beijing was starting to get really bad and I was overwhelmed with a sense of guilt that I had brought my children into a world that was heading in completely the wrong direction. At that point, I could either go back into management consulting or reframe the direction and purpose of my career. I chose the latter! So, I went back to school and studied for my second Master’s Degree, this time in Environmental Economics. It completely changed my frame of reference – I figured out pretty quickly that I could take all I had learned about the financial industry from my previous roles and look forward, leveraging and applying this knowledge to think about our future, how we could use finance to get us out of the impending environmental crisis we face.
From there, I co-ran a carbon finance company, honing my knowledge of the carbon markets, and then on to running Asia’s sustainable investing think tank and then as Head of Asia for the United Nations-supported Principles for Responsible Investment. Through all of these roles, I worked on green finance concepts and market development, with some of the big investors, market regulators and governments in Asia. It has been a phenomenal journey – but not an easy one. Even just five years ago, people couldn’t grasp how important this area is, that this is the future of finance. Finally, we are seeing this change.
How can people step into this field?
There are now many interesting career opportunities opening up, both in sustainable investing but also in the field of green finance. Start reading up on the key issues, follow what is going on internationally in the policy and regulatory space too. And then network. Go to the increasing number of relevant events that are being hosted and reach out to people on LinkedIn. I would happily connect with you! In your own role and organization, try and think about where it can fit and what you may be able to do. Afterall, this is not going away – it is the future.
Where do you see sustainable investing going in the next few years?
Growing, growing, growing. In the institutional investor world, we are already seeing large asset owners and asset managers begin to focus on sustainable investing and this will continue. It will no longer be a ‘nice to have’ but sit at the very core of every financial market, every financial institution. At the retail investor level, we are only just getting started. Individuals are waking up to how important this is and beginning to demand more from the industry – through the products they invest in and the role that financial advisors play.
You are about to publish a book on financial feminism. How do sustainable finance and gender equality overlap?
My book, “Financial Feminism – A Woman’s Guide to Investing for a Sustainable Future”, is all about engaging with women and how they view and use their wealth. The concept of financial feminism has been growing over the last few years as we finally start to talk about the massive financial gaps that many women face, not only the pay gap but also the pensions and investments gaps.
But to me, financial feminism is not just about women earning and investing on a par with men. Financial feminism represents the opportunity for women to use their financial power to build the kind of world that they want to live in. Financial feminism gives women a voice to determine how the world should change for the better, and this feels like real empowerment.
Sustainable investing presents an opportunity for us to start influencing an aspect of our collective lives, what we do with our money. We don’t have to be pawns in the financial world, where someone else makes decisions on our behalf. We can educate and empower ourselves to demand better from the financial industry.
The problem is there’s not a lot of guidance out there for women who just want to get started on their sustainable investing journey. The financial industry doesn’t pay a great deal of attention to people who don’t have big bucks to invest. And that’s just plain wrong. The industry also does a fantastic job at putting people off, through ridiculous jargon and nonsensical terminology.
Of course, sustainable investing is not solely for women. Absolutely not. But we do know that women feel excluded from the financial industry, whether that is because of confidence, overuse of jargon that puts us off or simply the way the industry interacts with female clients.
What are some steps that all of us can take to help drive the changes you describe Moxie Future and your book?
When you think about how investing is defined - allocating money (or capital) to some kind of endeavour (whether it’s a company, a project or something else) with the hope of some future benefit - you can see how this has been manipulated. We have been told that the only future benefit worth chasing is … wait for it … more money.
But what if we, as compassionate and caring humans, want to aim for something bigger? And actually ‘future benefit’ means something quite beyond bigger financial returns, beyond more money? What if ‘future benefit’ reflected our desire to move towards as world that is cleaner, fairer and more equitable?
Through Moxie Future, an information platform for women interested in sustainable investing, and also In my book I talk through some of the practical steps we can take to start on this path.
1. Start with yourself
It is really simple - identify what your priorities are and get your sustainable investment strategy down on paper. It really is the first step and will lead to a whole host of actions that you can then take. Also make the commitment to keep on learning. The world of sustainable investing is rapidly evolving, and with that it means there is an increasing amount of data and research out there.
2. Be part of the movement
I actually believe that being a sustainable investor is part of a bigger movement that is already starting to happen. We are questioning the role that our values should be playing and how we can stay true to these. This is happening as think about money, wealth and investment and what this means for our society. Be part of that movement, build, grow and recruit. A good place to start would be joining an investment club, one that considers sustainability as a concern or priority. If you can’t find one, why not start one of your own?
3. Push the financial industry to do better
I urge everyone to lobby financial industry to do more for sustainable investors. That may be raising sustainable investment with your bank or your financial advisor, it may be contacting your pension fund to find out exactly what it’s up to, it may be taking to social media to ask questions and share experiences. All of this helps push the financial industry in the right direction.
4. Shout out about sustainable investing
Talk to your friends and family about what you are thinking and doing on sustainable investing. Share the journey, not just the results - while results matter, the reasoning behind those results can be equally as powerful. Change needs to happen in others, not just yourself, so use your influence to support others in thinking differently about their money and their wealth.
Jessica Robinson is the Founder and Managing Director of Moxie Future - the world’s first education, insights and community platform empowering women as responsible and sustainable investors. She also works as a strategic advisor to institutional investors, think tanks and governments on all things relating to green finance, sustainability and responsible investment. She has an extensive background in professional services and business consulting, focusing on financial services, environmental finance and sustainability industries. She frequently contributes articles, authors reports and speaks at conferences on issues including green financing, financial market developments, climate finance policy and gender finance issues.