Sustainable Fund Manager Who Shunned Banks Beats His Peers

(Bloomberg) -- A money manager who caters to wealthy investors has gone out of his way to shield them from the long-standing risks he says have made the banking sector incompatible with the concept of sustainable investing.

Chat Reynders, who runs Reynders McVeigh Capital Management, a $3.5 billion sustainable investment firm in Boston, said he’s long shunned banks after judging that they’re generally incentivized to tolerate risks that other industries don’t take, often at the expense of their fiduciary duties.

There’s a “very bad incentive mismatch and the potential for real trouble,” he said in an interview. For that reason, “we’re underweight in financials just as we’re underweight in energy.”

Reynders’ long-held view on banks is starting to resonate with other ESG fund managers, after the sector lurched into its biggest crisis since the financial meltdown of 2008. Investors now find themselves wondering how well bank stocks fit with the environmental, social and good governance goals that ESG is supposed to target.