Contributed by: Show Editorial Team
When we think about the word “sustainability” in America, Megan Starr says many of us think about people wearing Birkenstocks dancing around a campfire. But Starr, the Head of Principle and Impact for The Carlyle Group, said sustainability literally means “the ability to persist overtime.”
That’s the lens through which Starr—and The Carlyle Group—view ESG (Environmental Social Governance) Investing. In her mind, ESG Investing doesn’t just have to be do-good investing. It can also add material value to any portfolio. After all, an investment that shows long-term promise is a sound investment.
“At The Carlyle Group, we are in the business of buying good companies and making them great companies, and as we think about the next few decades, great companies create sustainable economic value,” Starr told Matt Bird, host of the Traders Network Show, at the 2019 Greenwich Economic Forum.
Starr said the public sector could be a great help to private investors, especially in the ESG space.
“Nonprofit organizations have incredible data and incredible resources, because that’s what they have built their careers and their organizations around. The challenge is how do you translate that into investment application?” Starr said.
Starr offered climate change as an example that private investors are concerned about. She said many NGOs have done excellent work mapping out sea-level rise and weather-related events, which private investors could use to assess the security of a given business’s supply chain. The relative security of that supply chain could absolutely influence investment decisions.
Another example Starr offered was energy investing. Adding solar and wind to your portfolio doesn’t have to mean immediately abandoning current energy sources. It’s all about planning for the future, she said.
“The energy transition is happening, but it’s going to happen over the next 20, 30, 40 years,” Starr told Bird. “So how do you prepare for the future while still making prudent decisions today?”
As with any financial decision, ESG investing is about weighing the risk versus possible return, Starr said.
“ESG Investing is just investing. So how do apply the same level of rigor that you take to any other investing question? It’s another lens of looking at risk and return opportunities in a changing world,” she said. “With ESG investing, it’s possible to do well, you just have to put the same level of rigor to it.”
(Written by Andrew Waite; Editing and revisions by Nicole Liddy)