Investing With a Clean Conscience

Under CEO John Streur, sustainable investment pioneer Calvert Research & Management hooked up with Eaton Vance in 2016, instantly transforming Eaton Vance into a socially responsible investing powerhouse. With $14 billion in assets, Calvert is the second-largest sustainable asset manager in the U.S., after Parnassus Investments, according to Morningstar.

That’s in no small part due to Streur, 58, who has busily made the case for investing according to environmental, social, and governance factors, or ESG. The message has gained influence with major clients and intermediaries, “even people who might not politically and philosophically agree,” says Streur.

There is now some $8 trillion in sustainably invested assets in the U.S., by Morningstar’s reckoning, including mutual funds, exchange-traded funds, and other products. Calvert’s largest fund is the $2.2 billion Calvert Equity (ticker: CEYIX).

As more companies adopt sustainable development goals and report that data—and as more related data become available—expect the strategy’s popularity to continue to resonate with investors.

Barron’s checked in with Streur recently about the outlook for sustainable investing and, as proxy season approaches, whether engagement works. Here’s what he said.

Streur: It has reached the tipping point at which it’s relevant to all investors. It’s early days still. The flows are increasing. You’ve probably seen BlackRock (BLK) changing an existing ETF so that it includes no guns, and filing for a bond ESG ETF. Of course we think we do things better than BlackRock, but I’m very respectful of the influence such a large firm has.

At Calvert, our distribution has picked up quite a bit since we got involved with Eaton Vance (EV). We have 27 old-fashioned open-end mutual funds—five index funds and the rest old-school actively managed funds, and no ETFs right now. All but four have net positive flows. And there is only one reason to hire Calvert: You want responsible investing.

Q: Is increased competition good news or bad news?

A: It is very good news. For a long time, we needed to explain to people exactly what we did and then debate if it made sense. Now the mainstream firms have become active. That’s good for Calvert and the whole movement, in terms of verifying the validity of the strategy.

At Calvert, we want to make a real contribution to how our capital markets function and [ensure] that companies are able to meet broader responsibilities to society. Our business is really easy: Beat the market and make the world a better place. I’m not sure the big firms have the same motivations.