Melanie Wadsworth Quoted in Blue & Green Tomorrow on Sustainable Investing

The ethical investment movement has gained traction in recent years with investors representing groups that exclude stocks from their portfolio that conflict with the groups' political or moral beliefs. While religious organizations have long excluded some "sin stocks" from their investment portfolios, the movement is spreading to include environmental, social and governance (ESG) issues.  

Melanie Wadsworth, a partner at FaegreBD whose practice focuses on initial and secondary offerings on UK securities exchanges, was quoted in Blue & Green Tomorrow  about the history of sustainable investing. The argument came to a head 30 years ago in a case involving a pension fund for the National Union of Mineworkers. At issue was the union's attempt to make their pension scheme investments in accordance with the union's policies.

"The judge said the financial interests of the scheme's beneficiaries should be the paramount consideration of the trustees," Wadsworth said. "People have tended to interpret the judgment as stating that profit maximisation is the most important thing and should override any other interests."

Wadsworth notes that while historically, profit maximization was of utmost importance, the investment landscape is changing. "With the UK's Stewardship Code requiring institutional investors to disclose how they are discharging their stewardship responsibilities in the companies they hold shares in, there is a growing acceptance that far from being a drag on earnings, there is a link between good performance on ESG issues and financial performance," Wadsworth said.