Steering Businesses and Investments to Fight Climate Change

In the past few years, a growing movement among investors has highlighted the importance of environmental, social, and governance factors—collectively known as ESG—as a way to determine which companies are just and sustainable. Not only are such investments good for the planet, the thinking goes, but they are also financially sound, since they are less exposed to environmental risks or public relations disasters.

One challenge for the ESG movement, however, has been determining just what makes a company sustainable when it comes to the needs of its customers, employees, and the environment. Enter Shrinal Sheth, F19, a master’s of international business graduate of The Fletcher School, who spearheaded the development of 21 ESG metrics for the World Economic Forum.

“It seemed impossible because there were so many different frameworks in the market, and no harmonized understanding of what ESG could be,” Sheth says. Nevertheless, she co-led a team to create a set of metrics that could apply to companies in any industry, serving as part of the working group that drafted a report whose standards have been widely adopted in the corporate world.

“It was the most difficult piece of work I’ve done in my life,” says Sheth, who at age 27 was named to the 2023 GreenBiz 30 under 30 along with other young professionals “fighting climate change at work” and a 2023 Global Impact Leader by the Dubai World Trade Centre’s GITEX Impact. Now an investment banker at Deutsche Bank, she counsels investors and companies on how they can achieve both financial and ESG goals.

From Small Thought to Collective Action

Sheth grew up in India, where her family runs a chemical company. Her environmental awakening came as an undergraduate at Christ University in Bangalore, where she became acutely aware of the amount of waste generated by her college’s 18,000-person campus.

“I thought there must be something we could do about it,” she says. Turns out, there was. She became a UN-affiliated climate counselor and helped conduct workshops to educate students. She worked with the university to recycle waste and even use food waste to power a biogas plant, eventually securing a commitment to zero waste. “It made me realize that a simple thought could lead to a positive outcome if you just start speaking with people and focusing on collective action,” she says.

Graduating with a degree in finance, she continued her climate engagement while working in her family business, focusing on how it could be more sustainable. For instance, she worked with pharmaceutical companies to treat waste byproducts of drug manufacturing to create a new product. Her goal was to “generate more cash flow, but also do something better for the environment.”

Impact and Returns

At Fletcher, Professor of Practice Patrick Schena, an early proponent of ESG investing, advised Sheth and three other students in the 2019 Kellogg–Morgan Stanley Investment Challenge, where their plan to spur solar infrastructure with municipal bonds in India became a finalist in the competition and earned them a trip to Hong Kong to present the proposal. 

Sheth was also co-head of the Fletcher Finance Club and a member of the Fletcher Social Investment Group. Through that group, she helped counsel microfinance company Kiva on the financial and social indicators it could look at to help it invest.

A Lightbulb Moment

Schena introduced Sheth to Adam Robbins, F14, then–head of the World Economic Forum’s Future of Investing Initiatives. Sheth started as an intern and quickly rose to become the Forum’s youngest-ever project lead for investing. She spent more than six months interviewing more than 200 companies, investors, and other organizations to get feedback on the 21 ESG metrics, which fall into four categories: governance, planet, people, and prosperity.

Key to this initiative that would span industries, she says, was deciding early on that they would not develop new metrics, but rather leverage what was already present within the responsible investing world. “It was a lightbulb moment, because then we could collaborate with other entities, and also show the corporates that we were drawing on existing metrics wherever possible and this wasn’t one more framework they had to report against,” she says. The metrics have now been incorporated into the International Sustainability Standards Board (ISSB).

Driving Capital

In her current role at Deutsche Bank, Sheth counsels companies in their pre-IPO stage on how they can incorporate good ESG practices into their business, as well as works with companies on identifying businesses they can acquire to augment their green portfolio. “My goal has been to drive capital where it can have the most impact in dealing with climate change,” she says, “starting with hard-to-abate sectors, measuring their ESG performance through the right metrics, and then moving into helping investment firms think about what companies they should invest in.”

In that mission, she’s earned respect by doing her homework and being prepared to tackle difficult issues. “It’s really about figuring out the concrete steps to address the problem,” she says, “and for me it is driving capital towards decarbonization, and showing why it makes sense.”