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From Risky to Resilient: 3 Perspectives on Future-Proofing Your Investments

L-R: Tensie Whelan, Robert Engle, Anne van Riel and Courtney Thompson | Image credit: NYU Stern Center for Sustainable Business

One of many highlights of Climate Week NYC was a roundtable discussion hosted by SustainAbility and the NYU Stern Center for Sustainable Business, on “Innovating Investments for Climate Resilience.” Tensie Whelan, Director at the Center for Sustainable Business, moderated the conversation with Robert Engle, Director at NYU Stern Volatility Institute; Anne van Riel, Head of Sustainable Finance for the Americas at ING; and Courtney Thompson, Manager of Global Sustainable Finance at Morgan Stanley.



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The discussion covered a variety of approaches to addressing climate change through investments — one of the hottest topics in a month dominated by global climate events across the US. At the Volatility Institute, Engle and his team are designing investment strategies to ameliorate climate risk. “We are exploring how you can invest a part of your portfolio in assets that will do especially well if the climate is especially bad,” he said.

“At ING, we see it differently,” said van Riel, who manages a $500 million portfolio. ING’s three-pronged approach includes 1) screening out unwanted investments, including phasing out coal exposure; 2) focusing on the renewables space; and 3) engaging with clients to talk about their transition and how they are future-proofing their business.

Thompson explained that her team has the mandate of driving a sustainability strategy at the firm level and across different clients including investment, wealth management and corporates. They did a survey of global asset owners and found that 84 percent were incorporating ESG factors already or considering doing so. 

The discussion that followed touched on the specific methodologies, tools and financial products they are adopting. Some of these include sustainability bonds; loans linked to sustainability performance; and tools to measure the sustainability performance of buildings, propose improvements and calculate payoff time.

The panelists also touched on whether divestment helps or hurts; as van Riel noted, “Divesting takes away your seat at the table.” According to the panelists, a clear policy environment, additional capital, and a consensus in public opinion about the importance of climate change in investing and policy making are still needed.

As Engle pointed out, “People living by the sea are worried about sea level rise, but the rest of us aren’t; people in California worried about wildfires, but the rest of us aren’t. What does it take to get everyone on the same page?”

But things are changing. What gives Thompson hope, she said, “is the demand across our base of clients, including corporates, as well as individual and institutional investors.”

 


Mia Overall is a sustainable business consultant, founder of Overall Strategies, based in New York City. She has advised global companies around the world on their sustainability strategies, initiatives, reports, and helped them drive sustainability through supply chains,… [Read more about Mia Overall]


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