Thomas “Tom” Finke is the CEO and Chairman of Barings, LLC and has been a part of banking and investment management for close to 34 years. Thomas Finke plays an integral role in the organization that promotes the importance of sustainability.
Sustainability has been a popular conversation piece in the last few decades, but more than ever, investing in environmental and social governance (ESG) platforms has become a part of the collective corporate agenda.
With climate change and other environmental issues serving as deciding factors, corporate interests are not only viewed as money-making ventures but also as proactive efforts for conservation. As of 2019, investors have poured more than $12 trillion into socially responsible causes. Today, every firm on the S&P 500 issues a sustainability report as a part of embracing corporate social responsibility practices.
In terms of investing, a few trends have dominated the markets in 2019 and the first quarter of 2020. The first trend is to invest in small capitalization companies that exhibit ethical behaviors, lower carbon emissions, and governance run by founders. Those who analyze companies also typically look at the company’s overall financial health because it is usually connected to ESG performance. As it relates to particular investment funds, analysts are also looking at ways to incorporate ESG investments into fixed-income portfolios.
The sustainability movement is also seeing the green market increase, and this includes equities, government bonds, exchange-traded funds, and hedge funds. In 2019, 479 green bonds were issued globally, which was higher-almost a 25 percent from 2018. Furthermore, green industries (stocks) are expected to become the most valuable investments by 2038, even surpassing technology monopolies.
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