A science-based framework for evaluating sustainable investing

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2 min read

Consumers are increasingly choosing sustainable investments with socially responsible and environmentally-friendly goals. While there is promise in this area, there also is the potential for companies to claim to be more environmentally or socially responsible than they actually are. Now scientists at City University of New York (CUNY) and Harvard T.H. Chan School of Public Health have partnered with UBS Asset Management to develop a scientific framework to help investors judge whether companies’ actions, products, and services support the environment and human wellbeing. The framework seeks to identify investments that promote four United Nations’ Sustainable Development Goals — access to clean water, and maintaining human health, food security, and reducing climate change. UBS Asset Management and the Dutch pension fund PGGM Investments are using the metrics to test the concept on a $2.1 billion portfolio of public equities.

In a Policy Forum, published Feb. 2, 2018 in Science, John Spengler, Akira Yamaguchi Professor of Environmental Health and Human Habitation at Harvard Chan School, and co-authors describe an ongoing effort to develop standardized metrics to determine how companies impact people and the environment. They note that the basic information that companies declare in sustainability assessments is not standardized and is difficult to verify. For instance, a small renewable energy company in an area with high air pollution could generate greater positive impact on human health than a larger company in a region with cleaner air.

“We need to reframe sustainable development in terms of building our collective natural, human and social capital,” said Spengler in a Feb. 5, 2018 Forbes article. “In order to do this our financial institutions need clear signals that the goods and services of companies are actually healing natural systems and providing for the wellbeing of society.”

Other Harvard Chan School authors of the Science article include Ramon Sanchez and Jonathan Buonocore.

Read a press release: CUNY, Harvard scientists team with UBS Asset Management on sustainable investing framework