Broker Check

Are Your Investments Aligned With Your Values

February 09, 2021

As consumers get more knowledgeable and more conscious about their every day choices, it has an impact on their buying behavior. I read the book Soul of the Money by Lynne Twist many years ago. It is about the basic concept of spending money based on your values, i.e. buying from organizations that do the right thing and doing business with the ones which care about the same values you do.

This now translates to how consumers invest as well. Conscious investors want to invest in companies which are socially responsible. (Different terms are used for the same concept like “community investing,” “ethical investing”, “green investing”, “impact investing”, “mission-related investing”, “responsible investing”, “socially responsible investing”, “sustainable investing” and “values-based investing”).

What is sustainable investing? It is an investment discipline that considers environmental, social and corporate governance (ESG) criteria. It’s about recognizing that the companies addressing humanity’s biggest challenges are often those that are well-positioned to grow.

Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights.

We see investors and organizations are paying more attention to these topics. As a result, from 2014 to 2016, sustainable, responsible and impact investing enjoyed a growth rate of more than 33 percent, increasing from $6.57 trillion in 2014.*

According to research by Morningstar** ESG funds outperformed conventional funds in 2019. Also, according to a report*** published by Morgan Stanley Institute for Sustainable Investing, there is no financial trade-off in the returns of sustainable funds compared to traditional funds, and they demonstrate lower downside risk.

The data supports that you do not have to sacrifice returns in order to invest in a socially responsible way.

Please contact me if you want to make sure your values are aligned with your investment and you care about the impact your investments make in our world.

ESG investing involves the exclusion of certain securities for nonfinancial reasons.  This may result in the investor forgoing some market opportunities that may have been available to those not subject to such criteria.  There is no guarantee that any investment goal will be met. 

* The Forum for Sustainable Investment and Responsible Investment