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Alternative Market Briefing

Green Alpha Advisors goes long on the 'next economy'

Friday, July 14, 2017

Bailey McCann, Opalesque New York:

Garvin Jabusch co-founder and CIO of Denver-based Green Alpha Advisors bristles at being lumped in with other sustainability and ESG funds. When we met, he was in New York to speak at a sustainable investing conference about what he calls the "next economy" and explain why it's the future of ESG investing. "The problem with a lot of ESG funds you see out there today," he says, "is that they just screen out industries like tobacco or oil and call it sustainable without thinking through what the future is. That's not a sustainability strategy, that's just slightly greener benchmark beta."

For Jabusch, many ESG strategies are too heavily correlated to the S&P 500 benchmark, which is essentially an index of the legacy economy. Big chunks of the benchmark include companies that only fit an ESG strategy if the definitions of ESG and sustainability specifically, are generous enough to support natural gas producers or heavy manufacturing companies. Jabusch contends that a true ESG strategy should be focused on the economy of the future, which means looking at companies that are positioned to deal with climate change, resource scarcity and widening inequality.

"If you want to invest in sustainability, you shouldn't start with the old economy as a basis for your thinking. When we start looking at companies to invest in, we start with what the science and research on the future says and we end with a list of stocks derived ......................

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