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Sustainable Investing Case Study #2

 


My initial introduction to sustainable investing was in 1997, which at the time was called “Socially Responsible Investing”.  The team that I was part of acted as the investment portfolio consultant for a religious organization.  Ever quarter we would analyze their portfolio to make sure that it excluded certain companies that were involved in the business that conflicted with their social values against weapons, war, and tobacco (but not alcohol).  The obvious companies whose products conflicted with the clients’ social values were gun/ammunition manufacturers, defense industry companies and contractors and tobacco companies. The challenge was that many of these companies unfortunately were some of the best performing investments, which detracted from the overall performance of their investment portfolio.  However, I greatly appreciated their focus on their beliefs versus simply generating a higher investment return. 

Since 1997, however, “Socially Responsible Investing” which has been renamed “Sustainable Investing” has come a long way.  Advocates of Sustainable Investing argue that companies with better Environmental, Social and Governance (ESG) practices should perform better than other companies who do not have optimal ESG practices. 


Through these posts I hope disentangle the complicated web of vocabulary used to describe sustainable investing and clarify the fundamental concepts buried underneath the terminology.  

I describe sustainable investments as investments made with the intention of generating positive environmental, social, and governance (ESG) impact alongside a financial return. 

 

I would love to know if you feel that your values are adequately represented in your investment portfolio and what values are important to you. 


For 25 years I have helped families work towards their financial goals!  


Please contact me at (734) 725-2119 or cyril.white@fourfinancial.com if you have any questions or if there is anything we can assist you with!  


This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.  All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.  The opinions voiced in this material are for general information only are not intended to provide specific advice or recommendations for any individual.  Securities offered through LPL Financial.  Member FINRA/SIPC 

 
Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller. 

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