“Integrity is the essence of everything successful” -Buckminster Fuller
One of the benefits of the information age is the ability to make rational judgements about companies that you invest in. To the degree that a company fails to meet an investors expectations of what is acceptable, a company or industry becomes un-investable.
“Sustainable, responsible and impact investing (SRI) is an investment discipline that considers environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact.” (1)
A recent study by the US Sustainable Investment Finance Foundation revealed the tremendous growth in sustainable investing.
“The US SIF Foundation’s 2018 biennial Report on US Sustainable, Responsible and Impact Investing Trends, released today, found that sustainable, responsible and impact investing (SRI) assets now account for $12.0 trillion—or one in four dollars—of the $46.6 trillion in total assets under professional management in the United States.” (2)
“Money managers cited client demand as their top motivation for pursuing ESG incorporation.”
“Money managers and institutions are utilizing ESG criteria and shareholder engagement to address a plethora of issues including climate change, diversity, human rights, weapons and political spending,” said Lisa Woll, US SIF Foundation CEO.
The growth in assets managed in this fashion indicates “investors are truly beginning to understand the value of ESG considerations as an effective means of managing risk and improving investment performance.”
Socially Responsible Investing strategies addresses a large variety of considerations. Some strategies focus on environmental and climate change issues, others focus on labor issues, diversity and human rights, others look at corporate responsibility. Understand that there is a wide range of interpretation of how these different issues are considered and in turn how they affect what a client’s money is invested in.
“Imagine confronting that problem if you’re a banker arranging a billion-dollar portfolio for investors who only want to buy projects with a specific environmental, social or governance, or ESG, purpose. That’s why as ESG investing has grown, so have concerns about “greenwashing,” the practice of putting spin over substance.” (3)
It is critical for money managers AND clients to become more diligent in looking under the hood at what they are investing in and evaluating if a particular company matches your values.
I was recently asked by a friend about companies that issue Green Bonds. One of the companies listed as having a Green Bond was a utility in the middle of the US. They are in the process of building a large wind energy footprint. From prior experience I knew they had a history of operating coal plants. Sure enough, they still receive over 40% of their electricity production from coal…
To me as an advisor, that disqualifies this company from being sustainable. Coal is the primary contributor to Climate Change.
It is important to ask the investment professionals you work with about their use of ESG strategies and how that decision-making shapes their client’s portfolios. We live in a world of expanding and changing risks that needs to be addressed.
To learn more about Socially Responsible Investing please feel free to reach out to me.
Retirement Income. Tax Efficient Planning.
Life Insurance. Disability Insurance
Socially Responsible Investing
To learn more contact:
Cell: 267 323 6936
First Financial Group 150 South Warner Rd. Suite 120 King of Prussia, PA 19406
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Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 7101 Wisconsin Ave Suite 1200, Bethesda, MD 20814 301-907-9030 Securities products and advisory services offered through PAS, member FINRA, SIPC. CA insurance license #0I64535. First Financial Group is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.
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