Only You Can Make A Difference
Senior VP of Investments Kathy Leonard on the best way to finance.
MYTHBUSTERS More and more investors have heard the terms social, sustainable, impact or ESG (environment, social and governance) investing. Too many investors are still on the sidelines because of myths that have not yet been fully dispelled. It’s time to clear the air and get with the investing trend.
THE REALITY We all invest so that we can make a financial return on our money. That’s the clear-cut definition of investing. Some still believe that their returns will be lower if they chose sustainable investing but study after study has proven this is not true. Actually, at the start of 2014, sustainable strategies had grown to $6.57 trillion, an increase of 78 percent from two years prior. It is easy to create a diversified portfolio with competitive returns that is sustainable.
IMPACT I have also heard people tell me their actions are too small to make a difference, or they question whether investing this way actually stimulates change. One truth I definitively know is that what we do with our money has an impact. Just because you may not be following the impact your portfolio is having, does not mean it is reflecting the issues that are most important to you. In fact, you could be very surprised. Just because you may not be guiding your impact, does not mean it is not happening; because guess what – it is. Start focusing and getting guidance to have your portfolio reflect the issues that are important to you.
BE SUSTAINABLE in your portfolio and utilize ESG.
- Avoidance: Most investments will screen out the most egregious offenders for the issues that are important to you.
- Integration: More and more managers are identifying the best actors in each asset class and sector; supporting companies that are doing business in a responsible manner.
- Active Ownership: Proxy Voting, Advocacy and Engagement: Since companies are not perfect, this approach allows your investment manager to vote on and file shareholder resolutions on issues such as the environment, child free labor, and weapons production, to name a few.
- Community Investing: Channels investments into low income and other underserved communities provide capital, credit and training that these communities would otherwise lack.
- Ask the Experts: And as with any endeavor, it is important to have a partner that brings expertise, experience and a shared vision to the table. I have found that integrating individual’s social criteria alongside expert financial analysis will provide you with a diversified portfolio with competitive performance that will help move the needle on issues that are important to you.
The clock is ticking and we have too many problems and too little time to address them (I mean, who doesn’t?) Where you can start is with your investments.
Your portfolio is a powerful tool for change.
Not only will you feel better about how you are invested, but also you will help spotlight issues and raise them for debate, moving corporations down a more sustainable and overall successful path.