Alert iconWarning: Unsupported web browser

In View no longer supports your current web browser version, which means some functionality may be limited. Please update your browser for the best experience before you log in.

close icon
Citi Private Bank logo

Unsupported browser

Our website no longer supports your current web browser version, which means you are no longer able to access this website. Please update your browser to continue.

Continue
Investment strategy
March 23, 2021
3 mins

Why ignoring sustainability is a portfolio risk

March 23, 2021
3 mins
David Bailin
Chief Investment Officer
Harlin Singh
Global Head of Sustainable Investing
STEVEN WIETING
CHIEF INVESTMENT STRATEGIST AND CHIEF ECONOMIST
Business man looking at model wind turbine
SUMMARY

Sustainability is an increasingly important consideration in investment decision-making. Failure to consider it could prove an expensive mistake.


In past years, an investor could emphasize or ignore sustainability factors at their discretion, with personal views not market fundamentals driving their choice. But that has been changing rapidly, with sustainability increasingly functioning as a driver of performance and portfolio stability. For instance, according to Morningstar, in Q1 2020, sustainable strategies saw a net inflow of $45.6BN, compared to an outflow of $384.7BN for the overall fund universe amid the coronavirus pandemic market sell-off. Global sustainably invested AUM (measured primarily by ESG data integration) reached $40.5T in 2020. That represents roughly 33.8% – 40.5% of the estimated $100T - $120T total global AUM under professional management.

Despite how often it is talked about, we are often asked: What is a sustainable investment? Broadly, sustainable investing encompasses many different methods, and means different things to different investors, but the end goal is to use Environmental, Social, and Governance data to ensure that an investor’s core portfolio is constructed in a manner that accounts for not only what each company is doing business in – but also how each company is doing business.

This ranges from excluding companies that don’t meet the investor’s values (i.e. excluding "sin" stocks) to evaluations of whether a business has a sustainable business model or has a place in a future sustainable economy. Thus, sustainable investing has shifted from primarily focusing on a short list of exclusions or inclusions to broader thematic views. For example, we see many strategies exclude the entire fossil fuels sector both because of the harm caused by greenhouse gas emissions but also due to the risk to those assets in a world shifting towards a post carbon future. The shift from values-alignment to a concept of “do no significant harm” has been the primary driver of a growth in the list of portfolio exclusions. On the other end of the spectrum, are investors seeking value in sustainable themes – such as renewable energy, clean water, affordable housing, and healthcare.

If you are a Citi Private Bank client you can check the value of your portfolio by reviewing your monthly statements or, if you use Citi Private Bank In View, by navigating to the Account Overview page via Portfolio → Overview. If you have any queries please contact your usual Citi Private Bank representative.
Close Contact Form
Close Modal

You're about to leave the Citi Private Bank website

By clicking continue, you will visit a third-party website that is not owned or managed by us.

We have no control of the content, privacy or security beyond this point.

Continue

Stay on this page