The Cost of Conscience: Charting ESG Roadmaps for Institutional Portfolios

At Clearstead, we’re determined to provide effective and practical thought leadership to clients and the industry as a whole. Our second ClearPoint Roundtable, to be held Feb. 26 at The Union Club of Cleveland, will bring together top experts in academia, financial services, and law in order to help institutions and individuals navigate the fiduciary rules of ESG – or as we call it at Clearstead, Responsible Investing.

What is Responsible Investing?

Responsible Investing is an investment approach that considers environmental, social, and corporate governance (ESG) criteria to generate long-term competitive investment returns and positive societal impact. Just as there is no single approach to Social, Responsible, and Impact Investing (SRI), there is no single term to describe it. Investors use such labels as community investing, ethical investing, green investing, impact investing, mission-related investing, responsible investing, socially responsible investing, sustainable investing, and values-based investing, among others.  In recent years the term Environmental, Social, and Governance Investing, or ESG, has been used widely. Moreover, there are many different ways to implement ESG investing, from management of marketable securities portfolios to investments in alternative assets such as private equity. The point is, Responsible Investing has become more common — and in some cases — expected by institutional stakeholders.

The Forum for Sustainable and Responsible Investment estimates that in 2017 one out of every four dollars under professional management in the United States — $12.0 trillion or more – was invested according to socially responsible strategies.

SRI investing is not new, as union pensions in the 50s and 60s expressed social views by directing capital to affordable housing and health facilities.  In the 1970s, many institutions adopted the Sullivan Principles, which called for divestment of assets from South Africa to help end apartheid. In the 1990s there were growing demands that ESG factors be considered in investment of institutional portfolios.  A raft of academic studies in the 2000s argued that ESG investing is permissible and consistent with fiduciary duties; the United Nations codified its support for ESG investing and was supported by thousands of investment managers.

What are its challenges for institutions?

The push for fiduciaries to adopt ESG conflicts with longstanding American law.  In general, fiduciary laws say little about what people may do with their own money, but much about what trustees do with institutions’ money.  By law, a trustee must abide by duties of loyalty and prudence, and act solely for the exclusive benefit of beneficiaries, considering solely their interest, without regard for collateral benefits such as ESG causes.  Fiduciary laws are based on historical experience and financial theory, which indicate that any constraints on investment of portfolios – ESG included – by definition limit the ability to fulfill fiduciary duties. It is not hard to understand why trustees struggle balancing fiduciary responsibilities with ESG considerations.

Our Roundtable, The Cost of Conscience: Charting ESG Roadmaps for Institutional Portfolios will address these issues.  We will explore the why and how of ESG investing, and will consider the challenges for trustees who must reconcile fiduciary considerations with calls for greater adherence to ESG principles. The Roundtable is by invite only; however, Clearstead will be providing key roundtable takeaways on our blog. For key takeaways from our last For key takeaways from our last roundtable on OCIO trends, click here.

Clearpoint Roundtable Panel Participants


Mr. Robert Stein, Director of ESG Programs, John Carroll University


Ms. Priva Parrish, Managing Partner – Private Equity, Impact Engine; Impact Investor in Residence, The University of Chicago Booth School of Business

Mr. Andrew Watterson, Senior Vice President and Head of Sustainability, KeyBank

Mr. Robert Rapp, Visiting Assistant Professor of Law, Case Western Reserve University

Mr. Matthew Zalosh, Chief Investment Officer, International Strategies, Boston Common Asset Management

Ms. Jennifer Andress, Principal Consultant, BrownFlynn, an ERM Group Company

Ms. Cara Brook, President and CEO, Foundation for Appalachian Ohio

Mr. John Evans, Director, Clearstead Advisors, LLC


At Clearstead, we create integrated, prudent, and custom strategies that bring clarity to you or your organization’s financial future.

Clearstead is an independent financial advisory firm serving wealthy families and leading institutions across the country. As a fiduciary, it provides wealth management services and investment consulting to help clients meet their financial objectives, achieve their aspirations, and build stronger futures.




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