PORTLAND BUSINESS JOURNAL: ESG Investing Arrives

Thanks to our friends at Portland Business Journal, we take a closer look at climate change and other concerns that are creating new priorities for wealth management. A seismic shift is underway in how money is managed, driven by demand for environmental, social and governance investing. This article by Matthew Kish was originally published by the Portland Business Journal on February 27, 2020, and you can read it here. Here’s an excerpt:

“The options for investing in ESG have gotten more robust,” said Georgia Lee Hussey, founder of Portland’s Modernist Financial, which caters to investors with progressive values. “But ESG is like ‘organic’ in the ’70s. It doesn’t mean a whole lot yet. There isn’t a third-party (verifier) like for LEED-certified buildings or B-corps.”

Investment advisers say many clients aren’t clear what falls into which of the various environmental, social and governance buckets. There’s also confusion about how firms like MSCI calculate ratings. The ratings inform how some firms invest and could inadvertently minimize an investor’s preferred criteria.

“It’s a real problem,” Hussey said. 

While sustainable portfolios have done “fantastically well over the past five years,” she said investors should consider them a “luxury good.”

“We still don’t have very long data sets,” she said. “I’m an evidence-based investor and I believe in historical data. If you’re fully funded and you have enough money to live the rest of your life … then I’m 100 percent down.”

For now, Hussey advises ESG investors to plan for a 0.5 percent lower return than a traditional portfolio, just to be safe.

“I think companies (with strong ESG performance) are going to perform better over time. I think we may be seeing that to some extent now, but I can’t say that for certain until we have a better data set.”