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Sustainable Investing Also Is Risk Management

Barry Ritholtz

(Bloomberg Opinion) -- Investors’ personal values are fine when selecting stocks, but those values can also operate as a risk screen or a strategy to evaluate company risk, says this week's guest on Masters in Business, Brian Deese, global head of sustainable investing for BlackRock Inc., which manages more than $7 trillion in assets. Deese helps the firm use environmental, social and governance (ESG) factors as a risk measure across all of the firm's holdings.

During the past few years, ESG has also been a source of alpha, generating above-market returns for investors. Whether this is driven by a heavier weighting in technology stocks among ESG funds or is a function of the positives of ESG is, arguably, unknown.

We discuss how solar and wind have become the fast growing sustainable energy source in the U.S. Renewables, including hydro and nuclear, now account for more than 35% of U.S. energy production. The biggest changes coming in energy include efficiency improvements, decarbonization and electrifying transportation.

Deese worked in the White House as President Barack Obama’s senior adviser for climate and energy policy. He helped to negotiate the Paris Climate Accord and was one of the key architects of the rescue plans for Chrysler and General Motors.

His favorite books can be seen here; a transcript of our conversation is here.

You can stream and download our full conversation, including the podcast extras, on Apple iTunes, Overcast, Spotify, Google, Bloomberg and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.

Next week, we speak with fellow Bloomberg Opinion columnist Danielle DiMartino Booth, founder of Quill Intelligence, a research and analytics firm, and author of "Fed Up: An Insider’s Take on Why the Federal Reserve is Bad for America."

To contact the author of this story: Barry Ritholtz at britholtz3@bloomberg.net

To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

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