Sustainable Investing Gains Wider Acceptance
(3BL Media/Justmeans) – Sustainable investing essentially involves putting money into companies that are committed to integrating their business goals with the larger environmental, social and corporate governance criteria. Investors strive to make their investments deliver competitive returns apart from making a positive social impact.
From 2012 to 2014, the total U.S.-domiciled assets under management using socially responsible investment (SRI) strategies expanded from $3.74 trillion to $6.57 trillion, according to the U.S. Sustainable, Responsible and Impact Investing Trends report from U.S. SIF: The Forum for Sustainable and Responsible Investment.
The 2016 U.S. Trust Insights on Wealth and Worth Survey also reports that giving back is growing in importance among investors. The survey finds that four in ten investors believe that companies with good social and environmental practices are less susceptible to business risks. Nearly the same number also believes these good corporate citizens deliver superior financial performance.
Among the issues that matter most to high net worth (HNI) investors, environmental protection and sustainability tops the list, followed by healthcare and disease prevention and treatment. Of those who own or are interested in owning impact investments, more than half do so, because it is the right thing to do or because they feel it is the responsibility of American corporations to act in a socially and environmentally responsible manner.
For a socially responsible investor, it is important to determine the right companies and funds that have a strong ESG orientation. According to Martha Post, a principal and chief operating officer with Hewins Financial Advisors, SRI is a very broad designation. A number of data providers offer information on individual companies, mostly in the form of scoring systems based on ESG factors.
Investing with SRI concerns in mind no longer means that the investors will get sub-par returns. Post says that investors can add an SRI focus to portfolios without sacrificing the returns. A portfolio of individual stocks and bonds gives an investor the greatest flexibility to control what companies they own parts of. There are also very good mutual funds that provide diversified global equity exposure focused on sustainability.
U.S. SIF reported that 925 investment funds incorporated ESG factors in 2014, in addition to hundreds of alternative investment vehicles, community investing institutions and other vehicles.
Source: The Street
Image Credit: 3BL Media