Answer Box (TL;DR)
This episode breaks down what “sustainable portfolios” and ESG really mean in practice, and why they’re about risk and opportunity not politics. Dan and Peter explain how ESG data is used, why many “ESG funds” are actually just “less bad,” and how to build portfolios that focus on energy transition, water, infrastructure, biotech and other long-term themes. They also talk about performance, greenwashing, and what high-earning professionals should ask before shifting capital into sustainable strategies. Sustainable investing may still deliver competitive returns, but like any approach, it involves risk and requires careful manager selection.
Key Takeaways
- ESG is a risk lens, not a moral scorecard. In practice, ESG data helps evaluate how environmental, social, and governance risks may impact a company’s cash flows and business model things like climate risk to physical plants, labor issues, or board quality.
- Most “ESG index funds” are just “less bad,” not truly sustainable. Many large ESG products start with a traditional index and then slightly underweight higher-risk companies (like some fossil fuel producers) rather than owning only solution-oriented businesses.
- Sustainable portfolios are built bottom-up around real-world transitions. Peter focuses on themes such as energy transition (solar, wind, batteries), water, resilient infrastructure, green real estate and biotech areas that may benefit as economies decarbonize and adapt.
- Performance is about long-term trends, not one election cycle. While returns can lag in value-heavy periods, multiple studies show sustainable funds often perform in line with or slightly better than traditional peers over full cycles, especially when risks like climate and governance are priced in.
- Greenwashing is real, so diligence matters. Investors should look beyond marketing labels, review underlying holdings, and understand how managers define sustainability, handle fossil fuels, and integrate ESG data.
- Infrastructure and biotech may be major opportunity sets. Aging grids, water systems, and communications networks and AI-enabled drug discovery are examples of long-term themes where sustainability and potential growth intersect.
Key Moments
- [mm:ss TBD] – Dan introduces Peter Krull and sets up the conversation around ESG, sustainable portfolios and performance.
- [mm:ss TBD] – Peter explains what ESG actually measures, how it became part of mainstream due diligence, and why it’s often misunderstood.
- [mm:ss TBD] – “Less bad vs. truly sustainable”: the difference between typical ESG index funds and solution-focused portfolios.
- [mm:ss TBD] – Thematic building blocks: energy transition, water, infrastructure, biotech and green real estate.
- [mm:ss TBD] – How politics, regulation and global adoption influence sustainable investing but don’t fully control the underlying trends.
- [mm:ss TBD] – Peter’s view on where the next decade of sustainable opportunity may lie and how advisors can talk to clients about it.
Episode Summary
In this episode of Making Sense of Your Money, Dan Pascone sits down with Peter Krull, Partner & Director of Sustainable Investing at Earth Equity Advisors, to demystify ESG and sustainable portfolios. Peter shares how he went from a traditional wirehouse background to building a dedicated sustainable investing practice more than twenty years ago, and why clear communication matters just as much as data.
Peter clarifies what ESG actually is: a framework for measuring risk factors that aren’t captured in traditional financial ratios, such as climate vulnerability or supply-chain issues, and how those risks may affect a company not the planet financially. That’s why many large ESG index funds simply tweak weights instead of owning genuinely sustainable businesses. In contrast, Peter’s approach builds portfolios from the bottom up around long-term themes like clean energy, water, resilient infrastructure, green real estate and biotech, focusing on companies helping the economy transition to being more efficient and resilient.
Dan and Peter also tackle the performance question. While sustainable portfolios can underperform during value-driven stretches, long-term research suggests that integrating ESG considerations does not require sacrificing returns and may improve risk-adjusted outcomes when done thoughtfully. They discuss greenwashing, how to read through fund holdings and disclosures, and why investors should ask tough questions about fossil fuel exposure, stewardship, and impact claims. The conversation closes with Peter’s outlook on infrastructure and AI-enabled biotech as major opportunity sets, plus practical guidance for high-earning professionals who want portfolios that reflect both their financial goals and their values.
Transcript
Dan: Hi, I’m Dan Pasone, CEO of Tailored Wealth and host of the Making Sense of Your Money podcast. Real conversations to help high earners make sharper decisions so their money works as hard as they do. This is episode number 42 and today I’m joined by Peter Crawl, partner and director of sustainable investing at Earth Equity Advisors, to unpack how sustainability and performance can coexist, why ESG is often misunderstood, and what makes a truly sustainable portfolio, and where the next big opportunities lie in infrastructure and biotech.
Dan: Before we dive in, make sure you’re subscribed on your favorite platform. And if you find the show valuable, I’d really appreciate you leaving a quick review. Thanks so much and enjoy.
Voiceover: Brought to you by Tailored Wealth, helping business leaders live their version of a rich life.
Voiceover: Welcome to another edition of the Making Sense of Your Money podcast, where we cut through the financial noise and help business leaders to make smart, confident money decisions.
Dan: Peter, thanks for joining the Making Sense of Your Money podcast. Great to have you today, man.
Peter: Thanks, Dan. I’m excited to be here.
Dan: Yeah. Yeah. I’m excited to have you and this is a new topic for us and one that I get a lot of requests and interest about the idea of sustainable investing. So, I’m interested to hear your thoughts and expertise on it. But, as we always do, just start off by telling our audience a little bit about you, who you are, and how you got into this space.
Peter: Yeah, sure. So, I’ve been in the business now in general for about 27 years. I started in 1998. It still blows my mind a little bit that I’m actually that old. But I started back in
Dan: You were 12 though, right?
Peter: I did. I started when I was 12. And this I actually spray this gray hair in here to make me look older and a little bit wiser. No, I started with Merrill back in 1998. You know, cut my teeth there, learned the business from Merrill. Actually, I’ll go even farther back. My degree is actually in communications. It’s not in finance or business or anything like that, and you know, doing sustainable investing I think part of our challenge is always how do we communicate our value to clients and so I think that’s something that’s actually worked really well for me.
Peter: But yeah, I started with Merrill back in ’98, did a stint there for about five, six years, did a very short stint at a bank and realized that the bank channel was not for me, and in 2004 I hung up my shingle using LPL as my broker-dealer and started what at the time was Krull & Company but would eventually morph into Earth Equity Advisors. At the time I was dating the person over my shoulder here, who is my wife Melissa, who is a lot smarter than me. She has PhDs in microbiology and molecular genetics, so I don’t even touch that.
Peter: But we were having conversations about the environment and climate change and different things like that, and about the same time one of my clients introduced me to a gentleman named Bill McDonough. Bill at the time was considered the preeminent green architect in the world. He was developing cities in China, but he also had a book called Cradle to Cradle. And Cradle to Cradle is sort of a tome on circular economies you know, that idea that an economy shouldn’t be linear. When you have, say, an iPhone, when you’re done with it, it doesn’t go in the trash; you break it down into its constituent components and use those to recycle or upcycle into a new product. So that circular economy idea where you don’t have waste was something we talked about.
Peter: Not long after talking to Melissa about environment and climate and then having that conversation with Bill, I was like, “You know, I think I can do this.” So I hung up my shingle, and that was 21 years ago this past June.
Dan: Very, very cool. So you and I share a previous stop I was previously with LPL as well. Tell me a little bit about, you know, there’s a lot of financial advisors and wealth managers out there. What made you really want to focus on sustainable investing, and how does that actually come through in your practice today? Because I know you’ve got a couple of different offerings, both at the consumer level and at the business level.
Peter: Yeah, absolutely. Those conversations with Melissa and Bill really sort of set that in my mind. When I was at Merrill, I had one of our mentors in the office every time we would have a Calvert rep come in, he would say, “You know, I’m going to do that socially responsible investing thing.” And he never followed through because it wasn’t really part of his ethic, if you will. It just sort of was in the back of my mind.
Peter: When I had the conversations about climate with Melissa, when I had the conversations about circular economy and that kind of thing with Bill, I was like, “You know, I think that there’s an opportunity here.” And it was well before we had the breadth of different investment opportunities that we have now. It was hard trying to pick and choose what we were investing in. But over the last 21 years, what we have available to us has really, really grown. The research has gotten better, the due diligence has gotten better, and the companies that are even available
Peter: We’ve got an individual stock portfolio and sorry, my phone
Dan: We’re busy people, man. It’s all good. We’re fitting this podcast into our daily business lives.
Peter: Let me see if I can put this on do not disturb, There we go. So we’ve got an individual stock portfolio that we started in 2012, so it’s 13 years old. One of the examples I give is that there were no battery stocks back then 13 years ago and now there’s a number of different battery stocks that I can buy into for that portfolio. That’s just one example of how the market has really opened up to a more sustainable bent.
Dan: So let’s start with sort of the foundational level, because I think oftentimes people throw these terms like sustainable investing, socially responsible investing around but maybe don’t quite comprehend exactly what that means. Can you define what these terms mean for our audience that maybe have heard of them but haven’t really dabbled or gone all that deep?
Peter: Absolutely. So they’ve probably heard of two things: ESG and SRI. Those are two things that are really in the lexicon today. ESG means environmental, social and governance, and it came about from a paper related to the United Nations several years ago about how it would be good to start integrating this into the due diligence process. Prior to that, there was less quantifiable data that was put into the due diligence process. Their contention was that if we get actual material data, it will make our process even better.
Peter: What most people think ESG is, is not necessarily what it actually is, though. If you listen to politicians or a lot of the media, you’d think that ESG is basically rating a company’s impact on the world around it how it’s impacting the environment, society, etc. But it’s actually just the opposite. ESG risk is, what is the ESG risk on the company? What’s the environmental risk on the company?
Peter: The example I like to give is, let’s say you want to decide between two widget manufacturers. One of them has a manufacturing plant on the coast of Florida; one of them does not. The one with the plant on the coast of Florida has a material environmental risk associated with it because it gets hit with hurricanes and there’s a lot of opportunity for risk. So that’s what ESG does: it provides more information beyond just P/E ratios and debt and profitability to help you look at things that are material but aren’t typically counted with fundamentals.
Peter: What most large managers like the BlackRocks of the world, Vanguards, etc., do when they create ESG portfolios is they’ll typically take an existing index, layer those ESG risk metrics on top, and then make allocation adjustments based on those risk metrics. But what you end up doing let’s use Exxon as an example is you reduce the exposure to it, but you don’t necessarily eliminate it.
Peter: Instead of making it a sustainable portfolio, it actually makes it what I call a “less bad” portfolio. There’s nothing wrong with that, it’s just not truly what most people think of when they say they want sustainable investing.
Dan: That makes sense. So you’re not truly investing in sustainable if you’re buying one of those funds.
Peter: Exactly. If you’re working with retail clients and a client comes to you and says, “I want to own a sustainable portfolio,” and you say, “Okay, well we’ve got BlackRock; the price is low; it’s one of the biggest in terms of AUM for ESG funds,” and you buy them that, then three or six months later they get their report and go, “Let’s see what we actually own.” They look at the underlying holdings and see Exxon and Chevron and McDonald’s and FanDuel or whatever, they’re going to be on the phone with you saying, “I thought I asked you to buy me a sustainable portfolio.”
Peter: So from our perspective, a sustainable portfolio is more bottom-up. It’s asking the question: what are the industries and sectors and companies that are leading us into a cleaner, more resource-efficient, more resilient and more equitable economy? How do we build a portfolio based on those metrics? That’s how we look at sustainable investing.
Peter: We manage money in two ways: we’ve got fund portfolios conservative, moderate, aggressive and we’ve got an individual stock portfolio. When we put fund portfolios together, we’re building a good core like you would for any modern portfolio theory: large cap, mid cap, small cap, international, emerging markets, etc. But what we complement it with is thematics. The thematics include energy transition, water, infrastructure, biotech and green real estate.
Peter: One interesting theme is infrastructure. We live in Asheville, North Carolina, and about a year ago, Hurricane Helen came through and did a ton of damage. People weren’t expecting a storm of that intensity to hit 500 miles inland. It did. We saw a failure of transportation infrastructure, communication infrastructure, and utility infrastructure. Those failures will continue as we have more intense storms.
Peter: I know right now there’s a big storm as we’re recording this in the Gulf. I think Melissa said it’s the most intense storm ever recorded. Those storms will continue, and our infrastructure will need to be more resilient and adaptive. That’s going to take investment. So I look at infrastructure not just as a risk but also as an opportunity.
Dan: That makes sense as far as where we’re going in terms of the portfolios you’re building whether for individual clients and investors or for firms. Would you define them as 100% sustainable?
Peter: There is no such thing as 100% sustainable, realistically. It’s shades of gray. There’s no company that’s going to be 100% green; it just doesn’t exist and probably never will. When I look at thematics, it’s trying to figure out where the economy is going. At the end of the day, that’s the definition of growth investing investing in companies that are or will be market leaders and getting in before they’re fully recognized.
Peter: In terms of being 100% sustainable, no we’re trying to make it as sustainable as possible. Realistically, I’d put our portfolios up against any of the others that are out there.
Dan: Very cool. Tell us a bit about the types of firms or investors that are attracted to your offerings. What are the conversations like with folks interested in the type of investing you do versus all the other big money managers?
Peter: Well, it’s a good thing from a marketing perspective because people find us a lot based on what we do. It’s considered a niche, although there’s a joke: “What do they call sustainable investing in Europe? Investing.” There’s less of a distinction there.
Peter: The conversations we have with people are really about their values what’s important to them. We standardize our portfolios, and we skew to the sustainable side versus the purely social side because it’s more metric-driven and we have more visibility. It’s also probably a little less politically unstable. Regardless of what happens in Washington, companies know that retrofitting buildings is cheaper in the long run. They know building a solar field is more efficient and cheaper than building a new fossil fuel plant. We’re seeing that not just in the States but globally.
Peter: When we talk to people, we tell them: here’s where we see the economy going and how we envision moving forward. We give caveats because a true sustainable portfolio is going to live on the growth or growth-value side of the style box. When we get a value bias, like we did in ’21 or ’22, we may underperform a bit, but when we transition back to growth like we have we tend to believe we’ll perform at or better than the market.
Dan: So this show is all about making sense of your money. Explain to our audience, for those interested in sustainable or socially conscious investing, how do you make money in this space? What are the things you and your team are thinking about that maybe the average stock picker isn’t?
Peter: When I started in this business 20-plus years ago, we didn’t have fast access to data like we do now. It felt much more like we were working with long-term investors. As more data has come, and faster, it’s transitioned more to short-term speculation. Everybody wants to see what’s rising today the “Jim Cramerization” of the market. But that’s not what investing is.
Peter: Investing is sort of like watching grass grow. If the market averages 12% per year, theoretically you’re making 1% per month. So when we talk about making money investing sustainably, it’s about understanding the long term and understanding this is a paradigm shift actively happening right now. While we’re probably not going to outperform every year, over the long term, odds are you’ll perform at or better than the market.
Dan: Why? What makes you feel confident in that over the long period of time?
Peter: Because we have to, at this point, transition. The economy is shifting. Politics aside, companies are continuing to move to clean energy. They’re transitioning their workforce to be more diverse. They may not tout it as loudly as they did a few years ago there’s a lot of “green hushing” but they’re doing it.
Peter: If I look at the energy transition in the U.S. in 2024, 96% of all new energy capacity coming online was either solar, wind, or batteries. That’s unlikely to change. It might slow somewhat, but that will probably be made up overseas. China continues to be the leader in investing in new clean energy infrastructure.
Dan: Makes sense. How has access changed since you started getting into this business and focusing on it?
Peter: It’s night and day. There’s a lot more funds now, and a lot are greenwashed. Greenwashing is when you say you’re a green fund, or low-carbon, or environmental, but the underlying holdings make you scratch your head. The BlackRock example we mentioned owning Exxon, Chevron, McDonald’s in a “sustainable” fund that’s greenwashing.
Peter: Our idea with not owning fossil fuels is I don’t want to own both the problem and the solution. I just want to own the solution. In terms of what we have access to, there’s a lot more breadth. Some funds are really good; some are not so great. But in general, research from firms like Morgan Stanley and Morningstar shows sustainable funds have often outperformed traditional funds in recent periods, even with greenwashing in the mix.
Dan: I know you focus on the public markets, but help us understand the difference between public and private markets in your field.
Peter: There’s not a ton of private investments in our space for retail investors. You’ll see some private deals focused on solar fields, or infrastructure batteries, communications, that sort of thing. Those are areas we might be “missing” by sticking to public markets. But there are plenty of public opportunities to cover much of that: sustainable infrastructure ETFs, utilities focused on renewables, communications companies expanding resilient networks.
Dan: Got it. Last one on this: what do you see as the big trends right now? What are you thinking about three to five years out?
Peter: I’m going to keep coming back to infrastructure. I think that’s going to be one of the biggest opportunities in general. I also like biotech because of AI. Biotech has had a rough last few years, but there are companies now integrating AI into their drug discovery process. They can learn from these large models what works for certain people, how certain drugs worked in the past, and run that against in-silico models to find new use cases.
Peter: It costs about a billion dollars and takes a decade to bring a new drug to market. They think they can cut that roughly in half. So those are two areas plus water, and the broader themes I mentioned that we consistently look at.
Dan: Very, very cool. On the biotech point, we actually had a biotech expert on the podcast a couple of weeks ago, and she was explaining the challenges you just mentioned. There are a lot more losers than winners in the biotech space, and the time and dollars it takes to be successful are astronomical. If you can cut both down, you’ve got a better chance to be successful. That’s an interesting thought.
Dan: All right. Very cool, Peter. I think that’s a great place to transition now to get to know you a little bit more. So we’re officially going to transition into the lightning round. We never talk about the lightning round and it’s all about just the first thought that comes to your mind one-word answer or a long drawn-out thought or anywhere in between. You