Research

Sustainable Investing

A research study completed under a MSc in Environment and Sustainability at University of London - Birkbeck college, looks explore the bridge between wealth management and sustainability.

Abstract:

In order to achieve the sustainable development goals (SDG), solidifying the sustainability of

acceptable life on the planet, there needs to be capital allocated by all parties, including

individual investors. The key factor will be aligning an individual’s values to the underlying

investments, providing non-financial benefits. This research project aims to provide

commercially viable solutions, to the wealth and asset management industry, in order to

help motivate capital towards sustainable investments. Additionally, it aims to dispel

common myths surrounding these investments. This study was formed of two parts:

analysis of SDGs in a qualitative and quantitative manner, in order to develop sustainability

personas and the construction of sustainability aligned portfolios in order to test for out or

underperformance when compared to traditional investment benchmarks. Four personas

were created and validated: Social Humanitarian, Innovation Enthusiast, Environmental

Champion and Equity Seeker. Based on total return, of the 17 SDG portfolios, 13

outperformed the S&P500 over a ten-year period. Portfolios constructed according to the

sustainability-aligned personas all outperformed the benchmark. Additionally, portfolios

that were the most mis-aligned to sustainability mostly underperformed the benchmark and

increased risk levels. These findings indicate that using the SDGs as a basis for individually-

relevant sustainability can be an evolution of current ESG frameworks. Commercial solutions

based on market segmented personas can be a scalable tool for the industry. There can be

enhanced performance of sustainability-aligned investments, contrary to the common belief

that there is a trade-off between return and impact.

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