Critics point to a lack of transparency and differing definitions as sparking confusion about what investors are actually buying when it comes to sustainable investing.
Firms can focus on different metrics, whether it be environmental factors or maximizing social impact, sometimes at the expense of returns.
Lauren Taylor Wolfe's focus is on financial performance.
She spoke at the CNBC Delivering Alpha conference. She said that environmental and social considerations are important when considering an investment.
Assets under management ballooned and funds attracted record inflow during the pandemic. The Copia Group founder and managing partner said that investors have been investing around their principles for a long time.
It has been a trend for quite some time that asset owners want to use their investment dollars and heft to impact things that are very important to them.
Thomas said that he has been using the same tools for 30 years to identify opportunities in the market.
If returns aren't the sole focus of an investment vehicle, sustainable investing can still generate alpha. According to Roy Swan, director of missions investments at the Ford Foundation, the firm can invest around high impact ideas, while also maintaining the returns that are necessary to sustain a permanent endowment.
The Ford Foundation said in August that between its Mission Investments portfolio generated a compound annual return rate of 28% over the course of four years.
He said that they disclosed the information to encourage others who are on the fence about impact investing to do it again.
Swan said the foundation has specific themes it is investing in.
Impactive Capital's Taylor Wolfe said that investors need to be creative with how they use ESG to drive returns. She said that the market turmoil could lead to a reset of sorts.
She said that some of the less attractive strategies that haven't generated that outsized return are being eliminated.
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