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Outlook
December 9, 2021
3 mins

A personalized approach to building sustainable portfolios

December 9, 2021
3 mins
Harlin Singh
Global Head of Sustainable Investing
SUMMARY

How we address the various ways investors want to express their sustainability objectives


Key takeaways

Private capital has a vital role to play in bringing about a more sustainable world and economy

Addressing investor requirements for sustainable investing requires expertise

Innovative strategies to such challenges as climate change and biodiversity represent potential opportunities for companies and their investors

We help clients define their sustainability objectives and then reflect these in their investment portfolios

Our Investment with Purpose platform offers strategies to help implement sustainability goals

Sustainable investing’s evolution has accelerated rapidly over the past decade. What was once seen as a niche is now front and center for many investors. The growing interest in sustainable investing is based on ever greater awareness of its potential benefits. These include a diverse set of investment opportunities with potential for outperformance and management of certain risks that financial analysis may overlook.

Alongside the potential investment benefits, there is increasing awareness of the role of private capital in helping to address some of the challenges in the world around us. With this realization, it is evident that sustainability considerations can be implemented holistically for client portfolios.

The challenges and opportunities of sustainability

The United Nations’ Intergovernmental Panel on Climate Change’s (IPCC) latest report13 leaves no doubt that the planet is warming and that humans are responsible. A total transformation of the world’s energy system is required to reduce the concentration of CO2 in the atmosphere and help avert a climate catastrophe – see Greening the world.

Shifting to clean methods of energy production demands innovation and massive capital investment. According to a Citi GPS report, some $122tn of investment may be necessary. This is made up of electrification and renewables ($94.6tn), efficiency and circularity ($12.1tn) and alternative technologies ($15.0tn).14

Biodiversity loss – the reduction in the number of plant and animal species – is also a critical challenge for humanity. We have lost 76% of freshwater wildlife, 39% of terrestrial wildlife and 39% of marine wildlife since 1970.15 Biological diversity plays a vital – but often overlooked – role in human health, food security, business operations, supply chains and economic growth. Still, the risk that biodiversity loss poses is gaining recognition, as are the related opportunities for innovation. For example, seeking nature-positive solutions may create $10 trillion in business opportunities and 395 million new jobs by 2030.16

Meanwhile, widening inequality raises many concerns about fundamental fairness, social cohesion and faith in public institutions. Increasingly, though, it is also seen as a core issue for macroeconomic performance. Addressing inequalities could enhance growth, which ultimately serves everyone. Improved education systems, better access to affordable healthcare and meeting other basic needs all boost long-term prosperity and economic growth.17

Outlook 2022

Explore our high conviction views.

View all insights

Outlook 2022

Explore our high conviction views.

View all insights

13 Climate Change 2021 The Physical Science Basis, IPCC, as of Sep 2021

14 FINANCING A GREENER PLANET - Citi GPS, as of Feb 2021

15 BIODIVERSITY - Citi GPS, as of July 2021

16 BIODIVERSITY - Citi GPS, as of July 2021

17INEQUALITY AND PROSPERITY IN THE INDUSTRIALIZED WORLD – Citi GPS, as of Sep 2017