Bolded Wall Street Names Advancing Sustainable Investing — Add Morgan Stanley

Posted on September 8, 2014 by Hank Boerner – Chair & Chief Strategist

#Corporate Responsibility #Impact Investing #SRI 

by Hank Boerner – Chair, G&A Institute
In recent weeks our conversations with asset owners and managers have been very encouraging — a host of brand name Wall Street houses have been tuning in to sustainable investing and a good number have been putting in place frameworks, models, methodologies, approaches to incorporate more analysis of corporate ESG performance in their portfolio management.  The terminologies are still in formation mode, so we hear about corporate ESG performance, corporate responsibility, triple bottom line…and the emerging favorite for many managers, sustainable investing.
Thanks to our colleague, Erika Karp of Cornerstone Capital (she was a 25-year UBS top manager before starting her own firm), we have settled on “sustainable investing” as the go-to term for conversations with asset owners, asset managers, analysts, and more frequently now, corporate investor relations officers (IROs).
The bolded names of Wall Street have been focused on sustainable investing for some time now, including Goldman Sachs, UBS, State Street, MSCI, Thomson Reuters, and Wellington (which acquired the venerable SRI complex, Domini Social Funds).  The bold name owners have adopted sustainable investing strategies and policies, including CalPERS, CalSTRS, TIAA-CREF, New York State Common Fund, Norges Bank (for the Norway Sovereign Wealth Fund) and more.
A recent bold name to add to the mainstream Wall Street roster:  Morgan Stanley, which late last year launched the MS Institute for Sustainable Investing.  Chairman/CEO James Gorman in announcing the move, said: “…the institute will build on Morgan Stanley’s ongoing work to advance market-based solutions to economic, social and environmental challenges…”
Positioning the sustainable investing concept for the mainstream market, Chairman Gorman noted that M-S will “operate from the foundational principle that sustainable investment can only achieve significant scale by attracting a broad range of private sector capital…”  (C’mon in — this is the new new thing for the capital market player!)
Among its strategic objectives, the M-S Institute will seek to drive capital toward investments that promise sustainable economic growth.  A goal has been set to raise US$10 billion in total client assets through Morgan Stanley’s Investing With Impact Platform over the next five years by developing new products and solutions to enable clients to meet the demand for sustainable investment.
In coordination with MS Investment Management’s Long Only and Alternative Investment Partners businesses, new products were created with positive sector and/or environmental impact as a core part of the underlying investment strategy.
We’ve been having discussions here in New York City with Peter Roselle, VP / Financial Advisor of Morgan Stanley Wealth Management, The Pelican Bay Group.  He’s an enthusiastic evangelist for his company’s sustainable investing initiatives and brought to our attention two of the first products for clients:

  • Sustainable ESG Large Cap Core Strategy – this seeks returns from a large-cap core strategy with low turnover, constructed from stocks selected from the Dow Jones Sustainability Index family (DJSI), which is managed by Dow Jones (USA) and RobecoSAM (Switzerland).
  • Sustainable ESG Covered Calls Strategy – this seeks to generate income utilizing a call writing strategy on a portfolio of US blue chip issues…again, using the Dow Jones Sustainability Indexes.  Stocks selected must display a high degree of corporate sustainability.

(Note the DJSI was launched in 1999 and was the first global corporate sustainability benchmark. The DJSI managers look at the world’s leading companies through the prism of economic, environmental and social issue criteria.  The component companies are rebalanced each year – watch for the fall announcement.)
The addition of the bold name “Morgan Stanley” is a welcome and affirmative sign of the rapidly-rising interest in sustainable investment in the mainstream capital market houses.  The firm announced in mid-year that wealth management client assets under management toped US$2 trillion. (During the awful year 2008, as the market downturn reached for the bottom, client assets under management were $546 billion).
For information about the Morgan Stanley products described here, you can talk with Peter Roselle, who has been keeping the G&A Institute team up to date on developments:  Peter Roselle, CPM and CFP, Morgan Stanley Wealth Management, The Pelican Bay Group.  email:  NYC phone:  212-603-6171,