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.
Larry Fink’s (the CEO of Blackrock, the biggest asset manager) letter to CEOs is a milestone in the same direction, too. Here is what he says:
“Companies must ask themselves: What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce? Are we adapting to technological change? Are we providing the retraining and opportunities that our employees and our business will need to adjust to an increasingly automated world? Are we using behavioral finance and other tools to prepare workers for retirement, so that they invest in a way that will help them achieve their goals?”
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.*
If you want to make sure your values are aligned with your investment and you care about the impact the organizations make in our world, you can call me to find out more.
* The Forum for Sustainable Investment and Responsible Investment https://www.ussif.org/sribasics
* All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Investments in securities do not offer a fixed rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. Therefore, no current or prospective client should assume that future performance or any specific investment, investment strategy or product will be profitable.