While Wall Street investors and traders may have a reputation for ruthlessness, many are finding that responsible investments are providing a nice profit.
"We're more than wolves on Wall Street," Ethan Powell, CEO of Impact Shares told TheStreet. "Boston consulting group did a study that said companies within a given sector that score high relative to ESG standards outperform their competitors by roughly 50 basis points to 300 basis points. So there is some real meaningful points of differentiation, not only from an environmental social governance standpoint, but from a financial outperformance perspective."
He added that investing by ESG principles can help minimize downside by ensuring good governance in companies that are selected.
Powell pointed to a study done by Deutsche Bank which revealed fund managers with ESG guidelines regarding corporate governance specifically are far more successful than peers that did not.
In the end, even those firms reticent to require ESG analysis may be forced to as younger investors continue to put their pocketbooks where their politics are.
"[Millenials] are going to be receiving roughly $30 trillion in wealth over the next two decades, which represents the largest wealth transfer in the history of wealth," Powell explained. "Over 90% of millennials do want some form of social considerations in their portfolio."
As such, he expected that money managers will have no choice but to align with the interest of their clients and constituents.
To hear more about the trends in responsible investing, including the cavalcade of institutional investors like the $358.1 billion California Public Employees Retirement System putting their weight behind these strategies, check out the full interview above.