Catherine Cowley: ‘Sustainable Investing: What Everyone Needs to Know’ by H. Kent Baker, Hunter M. Holzhauer and John R. Nofsinger

The authors’ stated intention is to demystify sustainable investing for the ‘average’ individual retail investor who is motivated to achieve the dual goals of profit and purpose. They do this through a detailed examination of the many forms such investment might take, the provision of extensive on-line resources for investigating possibilities and the use of ‘Takeaways’ at the end of each chapter. These are a series of bullet points setting out the main points which the reader should note from the chapter, together with questions that they need to answer for themselves. The reader is encouraged to clarify their thinking as they go along, for example, the values that they wish to promote, their risk preferences and time horizon.

The authors are clearly masters of their subject. Yet unlike many experts writing on a complex subject, their language is clear and jargon-free throughout. The points that they make are illustrated through a wide range of examples. They make no assumptions about what investors’ values might be, and hence what they might think about issues such as the environment or investment in armaments. Instead they give advice on various places to look in order to invest in accordance with one’s values, including, say, strong support of the Second Amendment: the right to bear arms. They seek to provide a balanced explanation of the broad issues associated with sustainable investing concisely but authoritatively. Over the course of six chapters they aim to provide the thoughtful and conscientious reader with all the information they need to begin this form of investing.

Chapter One provides the context by examining the changing investment landscape and lays the foundation for the rest of the book. Chapter Two looks at corporate social responsibility and the evolving expectations about that and the obligations which follow. Chapter Three examines the social and religious values which shape sustainable investing. Chapter Four lays out the myriad investment options available. Chapter Five reviews the performance implications of sustainable investing. Finally, Chapter Six focuses on building a portfolio with a purpose.

The authors are clearly supportive of the concept of sustainable investing, which leads to them not challenging some of the common assumptions. They expect large corporations to be involved in significant social change without acknowledging some important questions. This would include the lack of democratic accountability, together with some corporate visions diverging widely from general social norms or even reality. One example would be the Gemini AI tool which, based on ideas about inclusivity, refused to depict images of white Vikings or Nazis, or only provided an image of the Pope as an Asian woman. Gemini was withdrawn within a month. The authors, however, seem to see corporations and social change as a seamless, wholly good thing.

There is not sufficient acknowledgement that there is no agreed definition of ESG (Environment, Social, Governance), what factors to include or what weighting is to be given to the different factors. The authors devote a paragraph (page 114) where inconsistent methods and ratings are mentioned, and then the investor is told to ensure that the rating provider’s approach is consistent with their preferences. This is unlikely to be helpful advice to the non-specialist. This lack of an agreed definition results in a range of dubious claims.  Owing to the time at which the authors finished writing (2021 at the latest) they do not cover the increasing regulatory scrutiny of ESG claims which has resulted in many products having to be withdrawn. It is still the case, however, that there remains such a divergence of approach that it is difficult for a retail investor to be sure of what is actually going on.

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Because the authors seek to cover every type of investment, many potential retail investors may feel overwhelmed by the astonishingly wide and conflicting possibilities available, particularly as set out in Chapter Four. This is one reason why I found the authors’ suggestion that readers can dip in and out of chapters depending on the topic unlikely to be helpful. Without previous explanation, much of the discussion would be impenetrable to the non-professional. The exception to this is Chapter Five, on performance. This might have been better placed as Chapter Two, as it gives a broad perspective within which the reader can locate some of the specifics, as well as reassuring an inexperienced investor worried that sustainable investment will inevitably result in poor performance.

It is not clear to me exactly who Chapter Six is aimed at. Building a portfolio is a complex task with multiple decision points. Certainly the material covers the necessary elements, but I considered it unlikely to be of particular value to the intended reader. High net worth individuals will almost certainly leave the detailed asset selection to their financial advisor.  Most other retail investors will not have sufficient funds to achieve the appropriate diversification that a portfolio brings, nor have the necessary knowledge and experience to stock pick. I would have liked to have seen a focussed discussion of the pros and cons of a bespoke portfolio versus buying into an existing fund.

The authors are based in the US, which inevitably means that this is their prime focus. This shows in their cultural, social and political assumptions. Most of their business examples are American; the extensive on-line resources cited are located there and focus on that market.  This reduces the pertinence of the book to those located elsewhere. Some of the options they suggest are not available in other markets or are in a different form. Regulatory and pension frameworks also differ. This is not to say that their work is not informative for non-US investors, but it does mean that potential investors will need to do more extensive personal research to find relevant information. The book does not quite live up to its sub-title: What Everyone Needs to Know.

A readership which might benefit would be financial advisors – not because they don’t already have the information, though there may be lacunae which could be filled – but because this book gives a clear, jargon-free route to explaining sustainable investment to a retail investor. Professionals can overlook the reality of expert and exclusive language which prevents some investors making a genuinely informed decision. If they had done nothing else, demystifying the language justifies the book’s publication. They have, however, also provided a useful resource for  potential investors. For readers prepared to make some effort to grasp the detail, this is a book which can inform their decisions and ably assist them to achieve their objective of investing for profit and in line with their values.


‘Sustainable Investing: What Everyone Needs to Know’ by H. Kent Baker, Hunter M. Holzhauer and John R. Nofsinger was published in 2022 by Oxford University Press (ISBN: 978-0-1976-4378-5). 272 pp.

Catherine Cowley has for more than 30 years been a Trustee of the Religious of the Assumption with particular responsibility for Investments.  Her doctoral thesis was on Ethics in the Financial Sector, and this remained the focus of her research, together with the application of Catholic Social Thought to business practice. Before retiring she taught Ethics at Heythrop College, University of London.