Impact investing and sustainable investment solutions are becoming more and more popular on Wall Street.
But there is a misconception that these solutions, which consider the environmental and social impact of investments, are not focused on getting the most return on investors’ capital. Derek Bingham is the head of GS Sustain Americas, Goldman Sachs’ US “research product team focused on global quality.”
Bingham’s team seeks to identify the sustainability measures that best align with returns in the long term. He said the belief that sustainable investments known as ESGs, which stands for “environmental, social, and governance,” were tied to underperformance, or were useful only to dedicated specialists, had kept some folks from pursuing them.
“The roots of ESG investing came from ESG specialists,” he said in a recent discussion on Goldman Sachs’ podcast, “Exchanges at Goldman Sachs.” “Folks that wanted to invest behind a certain set of values, wanted to focus on the ESG aspects of their companies. And as a result of that emphasis, rightly or wrongly, got a reputation perhaps of underperformance,” he added.
But Bingham sees this as a shortsighted view. In a recent report titled “The PM’s Guide to the ESG revolution,” Bingham and a team of analysts outlined how investors who consider things such as diversity, emissions, and other sustainable indicators are the ones positioned for success.