By Neha Kumari, Smeal MBA 2nd Year Student
Many students spanning from Smeal resident MBA and online MBA participated in the recent “Sustainable Finance webinar” by our notable alum Krishna Nadella (MBA 2004). As Americas Head of Sales for Bloomberg, Krishna brings 14 years of invaluable experience in financial markets and has a good perspective on trends gaining importance for investors.
Among many valuable things that Krishna discussed, here are my three takeaways:
Make a good investment case. Sustainability is still missing from the core business of many companies. The predominant stance is the expectation of doing good while doing well. Investors are looking for competitive, risk-adjusted market returns on their invested dollars even when investing for positive societal impact. The trade-offs between profit and purpose are diminishing (at least according to some observers), making it easier--but no less important--to make a quantifiable business case for sustainable finance.
Millennials want to invest for purpose and profit. With the biggest wealth transfer in human history taking place right now, Millennials are going to be holding considerable assets in the near future. The heartening sign of the times is that Millennials are also inherently inclined to spend their money to make a positive difference. Any business around financial investment space will be increasing dealing with these changing customer preferences.
Don't be so negative. A persistent misunderstanding about sustainable finance and socially responsible investing is that it only includes negative screening – meaning exclusion of stocks or companies from a fund, portfolio or stocks based on their practices on specific ESG (environmental, social and governance) criteria. But, sustainable finance is also positive screening where what is put into a fund or portfolio is more important than what is left out. The result would be encouraging investments in sectors or companies chosen based on their positive ESG impact performance.
Learn more about Sustainable Finance at Bloomberg.