Morgan Stanley Smith Barney is launching a platform for its financial advisors to offer clients investments with positive social and environmental impact in what appears to be a major push to offer sustainable investing to mainstream investors.
Although many broker-dealers allow their advisors to offer sustainable investments to retail clients, few have specific advisor platforms for that purpose.
MSSB made an announcement today about the new platform at the U.S. State Department-sponsored Global Impact Economy Forum.
The firm's new Investing With Impact Platform will offer an investment approach targeting risk-adjusted financial returns, MSSB said.
"This is an important initiative for Morgan Stanley Smith Barney," said Andy Saperstein, MSSB's head of U.S. wealth management, in a prepared release. "We hear frequently from clients and financial advisors about the importance of integrating sustainability themes into their investment portfolios. Now through the Investing with Impact Platform, MSSB is able to offer our clients an action-oriented approach to combine financial returns and their personal values."
MSSB said the platform will offer public and private market products to clients through their financial advisors and is the first phase of the firm's plan to meet investors' desires for investment opportunities with positive social and environmental impact without sacrificing investment performance.
"Our goal is to build this into a robust offering to meet our clients' needs, regardless of their impact priorities or what their portfolio fit might require," said Paul Hatch, MSSB's head of investment strategy & client solutions. "With over four million clients who have more than $1.7 trillion of investable assets, we are in a unique position to extend the reach of an 'investing with impact' program to one of the largest sets of investors in the world. Even a fraction of this total represents a substantial amount that could be invested in support of the common good."
MSSB quoted statistics from a 2010 report issued by US SIF, an association for companies and others involved with sustainable and responsible investing, that show nearly $1 in $8 in the United States, or $3.07 trillion, follows investment strategies that consider corporate responsibility and societal concerns.
Meg Voorhes, US SIF's deputy director, said MSSB's new platform isn't surprising, considering those statistics. "It seems that Morgan Stanley's rationale is based on client demand, and that's exciting," Voorhes said.
No one was available today at press time from Morgan Stanley to provide specifics on the kinds of investments that would be available on the platform and the launch date.
But an article published today in the Stanford Social Innovation Review said the new platform encompasses four different approaches: values alignment; environment, social and governance (ESG) integration; sector exposure; and impact investing. The article, written by Audrey Choi, Morgan Stanley's head of global sustainable finance and Hilary Irby, an Morgan Stanley executive director, explained the approaches this way:
Value Alignment - Screening by interests and values to avoid investments in potentially "objectionable" companies and industries, but not actively seeking social and environmental impact.
Environment, Social, and Governance (ESG) Integration - Identification of managers who target companies whose approach to environmental, social, or governance issues creates value differentiation.
Sector Exposure - Focus on themes and sectors targeting specific environmental or social change.
Impact Investing - Participation in investment funds that are focused on providing capital directly into private enterprises structured to effect positive social or environmental change.
-Dorothy Hinchcliff