April 23, 2024

The Green Investor powered by Investopedia is here. Caleb Silver is the editor-in-chief of Investopedia. I am your host, and we will explore what it means to become a “green investor” today. This week’s episode is old school. We’ll talk to Emily Chu, Calvert Investments’ original sustainable and environmentally-conscious money manager, about their client’s needs, current offerings, and plans. Calvert has many great insights, and Emily is a pioneer of ESG and responsible investment.

Officially, 2021 was the fourth-hottest year ever recorded. Twenty climate disasters cost more than $1 billion each. This is according to NOAA’s annual summary of extreme weather and climate events in the U.S. This is according to the yearly recap of climate and extreme weather events across U.S. by NOAA.

Meet Emily Chew

Emily Chew, Calvert Research and Management’s chief responsible investment officer and executive vice president, is. Before joining Calvert, Ms. Chew was the global head of sustainability at Morgan Stanley Investment Management (MSIM). She currently chairs MSIM’s Sustainability Council. Ms. Chew also serves as a CFA’s Technical Working Group member. She was previously the rotating chair of Climate Action 100+’s Steering Committee and the chair of the Asia Investor Group on Climate Change.

What’s in This Episode

In 1982, when few people were thinking about sustainable or responsible investing, Calvert Social Investment Fund was created. It was the first fund to incorporate ESG factors into financial analysis. The firm is owned by Morgan Stanley and has more than $36 billion in assets. It continues to be a leader in responsible investing forty years later. Calvert’s chief responsible investor officer, Emily Chew, is our special guest on Green investor. Welcome, Emily.

Emily:

“Thanks, Caleb. It’s nice to be here.

Caleb:

“You have a very cool job title. We don’t hear it often but will listen to it more. What does this mean? How does it relate to Calvert’s leadership team? “

Emily:

“I’ll answer the second part of your question first. Calvert it during rapid growth and expansion. We’re also building our leadership team. My role is to oversee our ESG research group and our corporate engagement group. I want to ensure their work aligns with our long-term investor thesis. This will help to spread those views across the board and ensure consistency. We also have Calvert’s Applied Solutions Group, which manages our responsible indices and other systematically collected products.

Caleb:

Calvert’s website will show you where you are. Calvert is a leader and takes this seriously. As I mentioned in the intro, Calvert has been in this business for a while. Calvert’s name is synonymous with responsible investing. What are Calvert’s customers looking for regarding climate-, green-or environmental-related investing? What are their needs? What are their needs?

Emily:

Caleb, you are correct that we are among the first in this space. It’s an honor to work for an institution that has been a trailblazer in responsible investing. Your questions are divided into two parts. The first is what reliable support means. Calvert has a clear view of what responsible investing means to me. Because so many terminologies and acronyms could mean different things to different people, it is essential to have a clear throat in these discussions.

Caleb:

“It’s alphabet broth out there. Please, just lay it out.”

Emily:

“Yes, it is. Unfortunately, it is alphabet soup. Calvert’s definition of responsible investing includes our fiduciary duty towards our clients. Our first and foremost goal is to provide attractive financial returns. We do this in a variety of investment types on the public markets. We invest in companies at the forefront of managing ESG exposures and risks. This includes managing unmitigated externalities to the company and the potential for positive change, product opportunities, and business models that will be available due to the systemic structural shift in capital markets.

“So, for us, the team responsible” encompasses financial returns and responsible corporate behavior from an ESG perspective. You introduced Calvert as a socially responsible company, which I believe was an essential part of Calvert’s DNA 40 years ago when he first started in this industry. For many people, “socially responsible” implies ethical or values-oriented investing. This is an essential concern that we address for our clients. It’s not something we believe you have to trade off for financial returns.

“You asked: “What are our clients looking to find?” Clients are looking for a conviction. They are looking for long-term, oriented investing. Not opportunistic trading around ESG topics or short-term trends. But they do want firm belief over the long term about the importance of ESG factors for companies. They are looking for authenticity. They are looking for trustworthy people to manage their capital and deliver financial returns. But they also want to look long-term and select companies they like to work with and companies with potential for improvement. As capital stewards, our role is to engage actively with these companies. Our clients want the complete package in this regard.

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