The Application of Sustainable Investing in Portfolio Management

Abstract

With more and more companies actively taking steps to improve and minimize their negative impacts on the environment, society, and the economy, corporations? sustainability practices are bearing increasing weight in the investment decisions of fund managers and individual investors. The following paper examines particular criteria and indices that classify a company as sustainable, as well as how these factors have the potential to add value to an investment portfolio. In addition, particular examples of current sustainable equity holdings in the University of Arizona Foundation?s student-run portfolio are analyzed. Lastly, Pinnacle West Capital Corporation, an Arizona-based utility company, is valuated using a combination of fundamental analysis and sustainability analysis to determine whether or not the inclusion of the company?s stock in a portfolio would generate positive returns. Pinnacle West was chosen as part of the applied portfolio management class?s on-going project to compile and valuate a database of Arizona companies actively engaging in sustainability practices.