Published on November 7th, 2013 | by Silvio Marcacci1
Two New Green Investing Options Could Help Avoid The Carbon Bubble
It’s one of the biggest hurdles facing fossil fuel divestment: Where to find sustainable investment options that create secure returns on investment in an energy market often dominated by fossil fuel companies.
But thanks to action taken by two of the world’s largest investment funds, that hurdle has just been lowered for organizations and individuals who want to avoid the carbon bubble by investing in a sustainable future.
Calvert Investments has launched a Green Bond Fund focused on climate change and sustainability solutions, while Morgan Stanley went a step further by establishing a multi-faceted Institute for Sustainable Investing.
A Fossil Fuel Divestment Option For Today
Both announcements will create new options for fossil fuel divestment, but the Calvert Green Bond Fund offers investors immediate action. The fund packages multiple climate- and sustainability-themed development bonds, project financing loans, and real estate deals together into one managed mutual fund.
“Corporate holdings in this fund will meet our definition of green if they derive at least half of their revenues from clean tech or an environmentally beneficial technology, product, or service,” said Cathy Roy, Calvert’s Chief Investment Officer. “We’ll also invest in project bonds that achieve project goals such as developing smart growth and transit, energy efficiency, pollution prevention, and green real estate.”
With $13 billion in total funds management and a history of managing sustainable bond products since 1987, Calvert is in unique position to provide financial returns for clean tech investors while funding a sustainable future and avoiding the estimated $6 trillion at risk from fossil fuel investments. “The fund is designed to capture the investment opportunity from the trillions needed in new capital to address key global sustainability challenges,” said Mauricio Agudelo, fund co-manager.
Improving Green Investing For Years To Come
While Calvert’s announcement provides options today, Morgan Stanley’s news could help improve sustainable investing options far into the future. The Institute for Sustainable Investing will develop sustainability-focused financial products, direct capital to sustainable investments, and create public-private partnerships to increase green investing opportunities.
Those imperatives may seem a bit vague at this point, but the Institute is launching with four major commitments:
- Building $10 billion in total client assets through the Investing with Impact Platform within 5 years
- Investing $1 billion in a sustainable communities initiative that provides capital for 4,200 affordable housing units
- Launching a Sustainable Investing Fellowship at Columbia Business School paired with a Morgan Stanley internship
- Creating new investment products where social/environmental impacts are a core investment strategy
Make no mistake – Morgan Stanley’s foray into green investing isn’t greenwashing. The firm estimates sustainable investing opportunities will reach $10 trillion annually by 2050, and with 4 million clients representing $1.8 trillion in assets, the Institute is a shrewd investment in the green business growth market.
“Our clients are increasingly turning their attention to what it takes to secure lasting and safe supplies of food, energy, water, and shelter,” said James Gorman, Morgan Stanley Chairman and CEO. “Our philosophy is clear – the most effective solutions to sustainability challenges are those that can be brought to scale.”