Sustainable aka socially responsible aka ESG investing (so many different names, so little time!) is one of the fastest growing investment trends and it’s here to stay. “Global socially responsible investments grew by 34 percent to $30.7 trillion over the past two years.” Despite this quickly growing trend, there is still one huge myth holding back sustainable investing and it’s this question: does investing sustainably mean sacrificing performance? Many people are under the impression that socially responsible funds underperform when compared to traditional investments. We’re here to debunk this myth once and for all and to set the record straight.
Investing sustainably does not mean you have to sacrifice performance. Let’s say it again together, INVESTING SUSTAINABLY DOES NOT MEAN YOU HAVE TO SACRIFICE PERFORMANCE. Now please take a moment to kindly sear that into your mind.
Sustainable investing is an investment strategy that involves utilizing an additional layer of data. In today’s age of big data, who wouldn’t want more data? In addition to traditional financial metrics, sustainable investing takes into account environmental, social, and governance (ESG) data. So data points like, are companies using renewable energy, are they managing waste responsibly, what are their environmental policies, do they have diversity and inclusion policies, do workers have access to safe and healthy working conditions, are there any lawsuits against the company, are there any claims of corruption or bribery. I’m not sure about you, but I would like to know these things about the companies I am investing in.
Research shows that “ESG funds consistently do just as well, if not sometimes a little bit better, depending on the timeframe, than conventional funds.” We believe that it is part of our duty to consider ESG data when investing on behalf of our clients. As a CFPⓇ with specialized knowledge of the fiduciary standard, it means being legally obligated to act in our client’s best interest.
Next time someone says to you, “I don’t want to invest sustainably because I don’t want to sacrifice performance” please, please, PLEASE, do us all a favor and stand up for sustainable investing. Gently inform them that’s a commonly held myth. Share this post. You can even send them our way and we’ll show them the light.
Together we can make a positive impact on not only our wallets, but also on the world.
