Navindu Katugampola honed his interest in ecology and the environment while studying Natural Sciences at Cambridge University. But it was a summer internship at Morgan Stanley's London offices in 2003, leading to a full-time job offer with the bank a year later that put him on a path to giving investors a way to support sustainable and eco-friendly projects around the world.
It wasn't a calculated move for Katugampola, whose family is from Sri Lanka and who was born in the UK and grew up in Riyadh, Saudi Arabia, before moving back to London for schooling at age 10. His current role as Head of Sustainable Investing for Morgan Stanley Investment Management Fixed Income & Liquidity evolved from of a series of positions he has held over his 15 years with the firm, primarily in the Debt Capital Markets group.
“I try to be open to the possibility of change rather than being prescriptive in planning my career,” he says, noting how he has hopscotched through several jobs at the firm, each affording him new skill sets and insights.
In his previous role as Head of Green and Sustainability Bonds, for example, as well as Head of Sovereign and Supranational Agency Origination, Katugampola helped put together a number of groundbreaking deals, including a $1 billion green bond, then the biggest of its kind, for the World Bank Group's International Finance Corporation. He also spearheaded a €7 billion deal for the Republic of France, the largest single issuance of green bonds at the time and one Katugampola considers a watershed. “It paved the way for more sovereigns to issue green bonds and was a catalyst for creating an ecosystem around sustainable finance.”
He takes this experience into his new position, where his primary role will be advancing an already strong global sustainability strategy for the Morgan Stanley Investment Management’s Fixed Income & Liquidity teams, which actively manage capital for institutional and high net worth investors. “It’s a huge opportunity for clients,” he says. “I thoroughly enjoyed my role helping issuers bring green bonds to the market, working on the supply side of the equation, but I felt by moving to the demand side I could make be even more impactful in helping to advance a sustainable finance agenda.”
Katugampola recently took some time to talk about his experience at Morgan Stanley. He shares his insights on The Business Case for Green Bonds in this Morgan Stanley Minute.
Within Investment Management Fixed Income & Liquidity, we are an active fund manager, which means there is tremendous opportunity across our various funds and portfolios to apply sustainable investing principles for the benefit of our clients.
In your previous role at Morgan Stanley, you advised clients looking to raise money in the capital markets by issuing green and sustainability bonds. How has the green bond market developed over the past decade?
When we first started this practice, green bonds were very much a retail-driven product. There was a relatively small market and it focused on climate-change projects, like renewable energy. What we've managed to do since then is broaden the issuer base beyond development banks to corporate issuers, financial firms—including Morgan Stanley—and even sovereigns, and to cover a much wider spectrum of themes. So it's not just renewable energy and climate change now, but housing, education, healthcare—a whole range of different things. It's created a vehicle whereby companies can think about their sustainability objectives and then try to define ways in which investors can support those objectives with their capital.
I already had a personal interest in the area, and ecology and the environment were part of my academic studies at Cambridge.
Certainly from talking to development banks, because a huge amount of what they do is so focused on sustainable development, we realized that there was an opportunity, and we started to hear about this growing interest among institutional investors, as well as retail investors, to support the same type of projects that development banks were financing in the field of sustainability.
Our starting point was the existing Morgan Stanley Investing with Impact platform.
The Global Sustainable Finance group had already gone through institutional investors and found those who were offering funds that had a sustainability focus, and it had those on the platform available for our Wealth Management advisors and their clients.
So it was a very easy step for us to try to engage with some of those people as well. Morgan Stanley also had strong institutional relationships with sustainability analysts at large money managers, so we were able to understand their approach to integrating sustainability considerations into their investments. That helped us design green bonds that the market would actually be interested in buying. Morgan Stanley’s Global Sustainable Finance (GSF) group was founded in 2009 to drive the firm’s sustainability strategy broadly and represents a long-standing commitment to sustainable finance leadership. This has created an incredibly strong foundation across Morgan Stanley to really innovate and execute as it relates to sustainable finance.
My goal is to take my experience honed working with issuers and investors around green and sustainability bonds, plus Investment Management Fixed Income and Liquidity’s hands-on, active portfolio management approach, and couple that with the long-standing expertise of GSF to deliver highly compelling solutions to our clients
Up to now, I would say that as far as my work on green and sustainability bonds goes, the most gratifying thing has been meeting heads of companies for the first time and seeing them realize that they have something within their organization that they could use in this market. Every organization is unique. You realize that they have unique selling points that perhaps they're not getting credit for, in terms of their own sustainability initiatives.
As sustainability has become deeply entrenched as part of an investment philosophy among asset managers, more and more companies have been thinking to themselves, “Well, we'd love to do something, yet we're not sure how." So helping companies to navigate has been gratifying. Now I’m looking forward to taking that experience to Investment Management to help grow our Fixed Income & Liquidity businesses and to help cement our place as a thoughtful, expert leader in sustainable investing.
Beyond establishing a global sustainability strategy for the Investment Management Fixed Income & Liquidity businesses, what other responsibilities will you be taking on?
In addition to working on strategy, I will also partner on building a center of excellence, produce thought leadership research exploring the business case for Environmental, Social and Governance (ESG) analysis and integration, identify opportunities for further engagement with external clients, and champion new sustainable investing products within Fixed Income & Liquidity.
Trying to stay on top of everything, because this space is evolving so quickly. Demand for sustainable investing has been growing dramatically, and clients are increasingly focussed on a broader sustainability agenda, looking not only at climate change, but also at other environmental and social challenges. This has also resulted in a greater focus from regulators, and a drive towards more consistent sustainability standards. Meanwhile, on the supply side, total green bond issuance has now reached over $1 trillion, and we’ve seen a wider range of issuers across a variety of sectors and geographies come to market.
But that challenging part is also the most exciting part. It is an opportunity for someone like me and an institution like this to help our clients to navigate this landscape and achieve their sustainable investing objectives
You've spent your whole career at Morgan Stanley. What is it about the firm that you find appealing?
It's small enough that you can be entrepreneurial, that you're encouraged to think beyond the confines of your day job and think about what else you can do. It's collegial enough that you can leverage a broad network of expertise within the organization. And it's still large enough that you have the power of a comprehensive franchise.
What I like about my job is the variety of clients and topics that I talk about in any given week.
For me, there’s never been a reason to go anywhere else. I have the opportunity here to explore things that I’m passionate about, and that’s hugely rewarding. If you’re doing a job you not only enjoy, but you deeply believe in, it gives you a huge motivation to keep doing it and to keep doing it as well as you can.