Well I finally did it. I put my money where my mouth is. I transferred all my assets into stock portfolios that were selected on a basis of environmental, sustainability, and good governance (ESG) criteria. The data are pretty clear that these investments not only are as good as other investments, but based on all the trends I see, they could easily outperform the market over the next decade. http://www.marketwatch.com/story/socially-responsible-investing-has-beaten-the-sp-500-for-decades-2015-05-21
This is never an easy decision. Sure, many of us have tried to support issues and companies that we think are doing the right thing for our communities and our future. Some of these ventures have paid off…. and some have not. But now that sustainability principles are being followed by a large part of the business community it is far safer and smarter to skew one’s portfolio toward those companies who do make a big point of following these guidelines and even more importantly, who invest in the tools and services for creating a sustainable future.
There is a difference today between what has been called socially responsible investing and impact investing. According to the Financial Times, the difference between the two is that “socially responsible investing is about avoiding investments that are inconsistent with the values of the investors,” while “impact investments actively pursue a positive impact.” It is a good time to ask your broker about both.
A few of the firms that are heavily invested in this realm are Clearingbridge, Trillium, and Calvert. There are certainly others, but looking at what these three are offering should provide you with a taste at how Wall Street is handling the increasing demand for better products. Certainly don’t take my word for it, I am not a financial wizard. But I do track many businesses and am always pursuing organizations that have solid sustainability track records. It is clear to me that we are not going to meet the challenges of the 21st century without significant effort by the private sector and they are not going to act unless we demand more sustainable products and services. When we do, they will provide them for us. I see a behavioral shift occurring today where an increasing number of people are asking for better more sustainable options and as that increases, businesses will respond. We are facing one of the greatest generational transfers of wealth ever and maybe, just maybe, we can influence the future with our choice of investments.
Take-a-way: Consider moving your investments into funds focused on creating a more sustainable future.