Every day, CREO and Cambridge Associates encounter wealth owners, families, and family office professionals who are starting down the path of sustainability investing. This paper details the typical path these investors take, the questions many of them face, and the way that many of them successfully develop a winning strategy that generates both returns and impact.
Based on observations over the years, we have developed a framework to help investors understand where they are in the process. We describe this framework as the Sustainable Investor Path (SIP) Wheel; illustrate the strategies of several wealth owners, families, and family offices; and conclude with some lessons and best practices that investors can use to facilitate their sustainable investing journey.
Overall interest in sustainable investing is growing as many institutional investors and wealth owners re-evaluate their exposure to fossil fuels and as political discourse on climate risks builds. Wealth owners are at the forefront of the trend, driven by a longterm time horizon that is a natural match to sustainable investments, personal values, and interests expressed by next-generation members. As demand for sustainable investment opportunities grows, the market responds by increasing the supply of products. The current enthusiasm for sustainable investments represents a rebound of sorts for an area with a checkered history of ebullient promotion, but comparatively subdued successes. Therefore, prudent strategy and focused execution are critical to success.