Environmental, Social, and
Governance Investing
August 22nd, 2014- RISE STL Summit
Jake Barnett and Dan Conner
Financial Advisors
Morgan Stanley
Morgan Stanley Smith Barney LLC. Member SIPC
101 S Hanley Rd. | Clayton, MO 63105 | (314) 854-9333
Overview
1. The Basics
2. The Potential
3. How can you George?
4. Q and A
1.) The Basics
Environmental, Social, and
Governance Investing Definition
 What is Environmental, Social, and Governance
Investing?
 Three Methods:
 Divestment
 Shareholder Advocacy
 Impact Investing
Method:
Divestment
 Definition: Avoiding moral objection
 Where is divestment used?
 Historical and contemporary movements on college
campuses
Citation:
{1}: Mufson, Steven. (2013). On Campuses, a fossil-fuel divestment movement. The Washington Post. Retrieved
from http://www.washingtonpost.com/business/economy/on-campuses-a-fossil-fuel-divestmentmovement/2013/11/25/45a545e6-52fc-11e3-a7f0-b790929232e1_story.html
{2}: McDonald, Michael. (2013, April 05). Harvard Embracing Fossil Fuel Condemned by Gore on Filthy Lucre.
Bloomberg Businessweek. Retrieved from http://www.businessweek.com/news/2013-04-05/harvardembracing-fossil-fuel-condemned-by-gore-on-filthy-lucre#p1
Method:
Shareholder Advocacy
 Definition: Use shareholder rights to advocate
change
 Climate-related resolutions on the rise
 “It's not like there is a flaw in the {oil and gas
company’s} business plan—the flaw is the business
plan..” (Bill McKibben)
Citations:
{1}: Berridge, Rob. (2013, April 15). The shareholders putting sustainability on the agenda. The Guardian.
Retrieved from
http://www.theguardian.com/sustainable-business/blog/shareholders-putting-sustainability-on-the-agenda
{2}: Ramsay, Adam. (2013, October 30). Bill McKibben interview- time for the climate movement to get on the
front foot. Our Kingdom. Retrieve from http://www.opendemocracy.net/ourkingdom/adam-ramsay-billmckibben/bill-mckibben-interview-time-for-climate-movement-to-get-on-fro
Method:
Impact Investing
 Definition: Investments… generate measurable social
and environmental impact alongside a financial return.
 New York Social Impact Bond






Citations:
{1}: Global Impact Investing Network. (2013). About Impact Investing. Retrieved from
http://www.thegiin.org/cgi-bin/iowa/resources/about/index.html
{2}: Goldman Sachs. (2012). Press Releases- Investing and Lending. Retrieved from
http://www.goldmansachs.com/what-we-do/investing-and-lending/urban-investments/casestudies/social-impact-bond-pdf.pdf
{3}: Depillis, Lydia. (2013, November 5). Goldman Sachs thinks it can make money by being a do-gooder.
The Washington Post. Retrieved from
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/11/05/goldman-sachs-thinks-it-can-makemoney-by-being-a-do-gooder/
{4}: Rockefeller Foundation (2012, July). Accelerating Impact: Achievements, Challenges and What’s Next
in Building the Impact Investing Industry
2.) The Potential
Mainstream: Carbon Pricing
 Major companies using internal carbon price:
 “climate change as a line item…They’re looking at it from
a rational perspective, making a profit. It drives internal
decision-making.”
 Bloomberg “Carbon Valuation Tool”
Citations:
{1}: Davenport, Coral. (2013, December 5). Large Companies Prepared to Pay Price on Carbon. The
New York Times. Retrieved from
http://www.nytimes.com/2013/12/05/business/energy-environment/large-companies-prepared-topay-price-on-carbon.html?_r=0
Coal, Oil, and Gas Reserves
 60-80% of current coal, oil reserves could be
unburnable
 Reserves are already priced into company’s bottom line
 40-60% of valuation at risk
Citation
{1}: Cameron, Catherine et. al. (2013, September 05). The environment: The Carbon Bubble. The Actuary.
Retrieved from
http://www.theactuary.com/features/2013/09/the-environment-the-carbon-bubble/
{2}: Leaton, James. (2013, January 30). HSBC study finds oil majors are at significant financial risk from
‘unburnable reserves.’ Carbon Tracker Initiative. Retrieved from http://www.carbontracker.org/news/hsbcstudy-finds-oil-majors-are-at-significant-financial-risk-from-unburnable-reserves?
Opportunities Looking
Forward
 Clean Energy Investment could triple by 2030
 Renewable one of many potential investment
opportunities:





Hybrid and electric vehicles
Smart Grid Technology
Energy Efficiency
Carbon Capture and Storage
Etc.
Citations:
{1}: (2013, April 2013). Strong Growth For Renewables Expected Through to 2030. Bloomberg New Energy
Finance. Retrieved from
http://about.bnef.com/press-releases/strong-growth-for-renewables-expected-through-to-2030/
{2}: International Energy Agency. (2013). Tracking Clean Energy Progress 2013. Retrieved from
http://www.iea.org/publications/TCEP_web.pdf
4.) How You Can Get
Involved?
There is Risk Out There
 30 years story
 Interest Rates
 Inflation Rates
 Government Debt
 Changing Environment
 Stress-Test your Investments (and advisors)
The Wake Up Test
 Get involved how you want
 Tactical ideas that target clean energy
 Entire portfolio framed in ESG ideas
 Etc.
 We believe the time is now.
Citation: Dewet, (December 18th, 2004). Slangkop Lighthouse, retrieved from http://commons.wikimedia.org/wiki/File:Slangkop-lighthouse.jpg
(Public Domain Free Usage Website, no copyright release required)
Thank you for your time!
Questions
Disclaimers
This material does not provide individually tailored investment advice. It has been
prepared without regard to the individual financial circumstances and objectives of
persons who receive it. The strategies and/or investments discussed in this material
may not be suitable for all investors. Morgan Stanley Wealth Management
recommends that investors independently evaluate particular investments and
strategies, and encourages investors to seek the advice of a Financial Advisor. The
appropriateness of a particular investment or strategy will depend on an investor’s
individual circumstances and objectives.
The views expressed herein are those of the author and do not necessarily reflect the
views of Morgan Stanley Wealth Management or its affiliates. All opinions are
subject to change without notice. Neither the information provided nor any opinion
expressed constitutes a solicitation for the purchase or sale of any security. Past
performance is no guarantee of future results.
Asset Allocation does not guarantee a profit or protect against a loss in a declining
financial market.
Morgan Stanley Smith Barney LLC. Member SIPC.
Disclaimers
 Investing in commodities entails significant risks. Commodity
prices may be affected by a variety of factors at any time,
including but not limited to, (i) changes in supply and demand
relationships, (ii) governmental programs and policies, (iii)
national and international political and economic events, war
and terrorist events, (iv) changes in interest and exchange rates,
(v) trading activities in commodities and related contracts, (vi)
pestilence, technological change and weather, and (vii) the price
volatility of a commodity. In addition, the commodities markets
are subject to temporary distortions or other disruptions due to
various factors, including lack of liquidity, participation of
speculators and government intervention.
Disclaimers
 Information contained herein has been obtained from sources
considered to be reliable, but we do not guarantee their accuracy
or completeness.
 Morgan Stanley and its Financial Advisors do not provide tax or
legal advice. Individuals should seek advice based on their
particular circumstances from an independent tax advisor.
 S&P 500 Index is an unmanaged, market value-weighted index of
500 stocks generally representative of the broad stock market. An
investment cannot be made directly in a market index.
 Equity securities may fluctuate in response to news on companies,
industries, market conditions and general economic environment.