The Duke and Duchess of Sussex have become the latest high-profile couple to join the surge in sustainable investing by partnering with Ethic, a US$1.3-billion investment fund in New York.
As "impact partners," Prince Harry and Meghan Markle will work alongside co-founder Jay Lipman to raise awareness about pressing issues such as racial injustice, climate change, and income inequality.
This move comes as environmental, social, and governance (ESG) investing continues to gain traction, with approximately US$35 trillion invested in ESG assets worldwide, according to the Global Sustainable Investment Alliance. However, concerns have been raised that some fund managers are misusing the label, a practice known as greenwashing.
"Sustainable investing is certainly in vogue right now, but likely for the wrong reasons," said Lisa Sachs, director of Columbia University’s Center on Sustainable Investment. "We shouldn’t confuse holding a value-aligned portfolio and mitigating exposure to risk with addressing the major and urgent underlying issues."
The Rise of ESG Investing
ESG investing has become an increasingly important aspect of mainstream finance, with regulators starting to scrutinize fund managers’ claims of sustainability more closely.
The growing concern is that many investment products are using the ESG label as a marketing tool rather than genuinely addressing environmental and social issues. This misuse of the term has sparked concerns about greenwashing, which can erode trust in sustainable investing and undermine efforts to address pressing global challenges.
Ethic’s Approach to Sustainable Investing
Ethic was founded in 2015 with the goal of creating bespoke investments tailored to customers’ specific social and environmental concerns. Lipman stated that investors can actively contribute to addressing society’s biggest challenges by collectively divesting from polluters and companies perpetuating racial discrimination, such as private prisons.
"We believe that investing can be a powerful force for good," Lipman said in an interview with The New York Times. "By partnering with Ethic, we hope to make a positive impact on the world while generating returns."
The Sussexes’ Entry into Sustainable Investing
Prince Harry and Meghan Markle have signed deals with companies such as Netflix Inc. since leaving their U.K. royal duties last year. Their partnership with Ethic marks another step in their transition towards more sustainable investing practices.
Their move has sparked interest among investors looking for ways to align their portfolios with their values while generating returns. As ESG investing continues to grow, the need for genuine and transparent sustainability claims becomes increasingly important.
Growing Concerns about Greenwashing
The SEC’s recent crackdown on overblown ESG labels highlights the growing concern that some fund managers are misusing the term to attract investors.
Lisa Sachs emphasized the importance of distinguishing between value-aligned portfolios and those genuinely addressing underlying issues. "We need to be careful not to confuse holding a portfolio with values aligned with our own and mitigating exposure to risk with actively working towards solving major global challenges," she said.
Conclusion
The partnership between Prince Harry, Meghan Markle, and Ethic marks another significant step in the ESG boom, which has seen approximately US$35 trillion invested in sustainable assets worldwide. As regulators scrutinize fund managers’ claims of sustainability more closely, the need for genuine and transparent sustainability practices becomes increasingly important.
By working with a reputable investment firm like Ethic, the Duke and Duchess of Sussex demonstrate their commitment to using their platform to raise awareness about pressing social and environmental issues while generating returns on their investments.