Sustainable Investing: A Theme for Stock Picks in 2021

November 13, 2020


Jacques R. Elmaleh, CFA, is a Senior Portfolio Manager, the Director of Research and a Principal at The Colony Group. He brings over 20 years of experience working with clients as a portfolio manager and director of research specializing in growth, dividend income and international equity strategies.

Brian Presti, CFA, is a Senior Portfolio Manager and the Director of Portfolio Strategy at The Colony Group. As the Director of Portfolio Strategy at The Colony Group, Mr. Presti assesses macroeconomic, financial market data and trends to determine appropriate investment opportunities and asset allocation.

In this 2,162 word interview, exclusively in the Wall Street Transcript, these two veteran professional investors look ahead to 2021 with some interesting observations on the market and top picks in their portfolio:

“We have always had three primary objectives that we want to help our clients achieve with sustainable investing: to have a positive societal/environmental impact, earn a competitive financial return while reducing risk and enable our clients to align their investments with their values.

Regarding this last objective, specifically, we strive to enable clients to target or impact specific issues that they feel the most passionate about.”

This investment philosophy has broad implications:

“From a portfolio design and implementation standpoint, our sustainable investments fall into two main categories. The first category is what we call “core sustainable funds.” These are broadly diversified funds that provide diversification both across and within different asset classes.

We have identified what we believe are appropriate investments in a wide range of asset classes, including domestic equities of all market capitalizations, international equities, both developed and emerging markets, as well as taxable and tax-exempt fixed income.

However, realizing that clients have specific passions or issues that they may want to tilt or impact within their portfolios, we also integrate thematic funds.

Thematic funds tend to be more targeted, concentrated funds that are investing in companies impacting a particular issue, whether that be the environment or women’s issues or water, just to name a few.

Integrating thematic funds allows us to customize each portfolio to align specifically with each client’s unique set of priorities and sustainable objectives.”

This leads to specific stock picks.  One example:

“We will talk about the United Nations’ Sustainable Development Goals — SDGs — in more detail later, but an example of a company addressing an SDG is Brookfield Renewable Power (TSE:BRF-A). It addresses U.N. SDG number seven, which is affordable and clean energy.

Brookfield Renewable Power is a Canadian company whose goal is the decarbonization of the global electricity grid. They generate 57 terawatts annually through renewable sources exclusively, which avoids 27 million tons of CO2 emissions every year. This equals to the displacement of all the CO2 emissions generated by the city of London.”

Another example of sustainable investment picks:

“The United Nations has 17 Sustainable Development Goals that they have established as goals to make things better. These include no poverty, zero hunger, good health and well-being, quality education, gender equality, clean water and sanitation, affordable energy and clean energy, decent work and economic growth, industrial innovation and infrastructure, reduce inequalities, sustainable cities and communities, responsible consumption and production, climate action, life below water, life on land, peace, justice, and strong institutions and partnerships for the goals.

Nomad Foods (NYSE:NOMD) is an example of a company working on SDG number 12, which is responsible consumption and production. Additionally, they also contribute to SDGs life below water and life on land as well.

There are many companies, like Nomad, that address more than one sustainable development goal. Part of our research in synthesizing an investment thesis includes determining which goals are being addressed.”

Get the complete information on these and other stock picks from Jacques Elmaleh and Brian Presti by reading the entire 2,162 word interview, exclusively in the Wall Street Transcript.