Gary W. Pelletier, CLU, ChFC, AIF®

Northeast Planning Associates, Inc.

Corporate, Estate

& Financial Planning


Investing In Good

| October 30, 2019
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More and more it appears that people prefer companies to not only have a solid product at a competitive price, but also provide a positive impact on our world.  We are also starting to see this spill over into the investing space as well.

ESG (Environmental, Social, Governance) investing is the next generation of what was previously known as SRI (Socially Responsible Investing).  SRI took an exclusionary approach by avoiding certain industries, while portfolios dedicated to ESG look to prioritize companies emphasizing ESG values, and the portfolio managers use their influence as shareholders to enact positive change where needed.

With the rise in popularity of ESG solutions, we also see the rise in the number of firms with ESG investing strategies.  In fact, according to the U.S. SIF Foundation, over $12 trillion was invested in ESG strategies at the end of 2018. (https://www.ussif.org/fastfacts

If this is an area of interest, what should you look for in a firm and manager when analyzing these options? 

Just like with any manager in a specialized area, experience and track record are paramount.  Also, ask for specific examples of times where the manager of the fund influenced positive change in a firm’s practices.  Look for areas that are important to you as well.  While there are broad-based options, you can also find investments that are more targeted in their focus on areas like clean water, sustainable energy, or specific religious beliefs.  For example, the top ESG criteria for investment managers in 2018 were environmental protection, tobacco, and conflict risk. 

Whether for individual investors or institutions, this is an area that will continue to grow in interest and options.  You may want to take a look at the US SIF Forum for Sustainable and Responsible Investment for some great information on this growing area.    https://www.ussif.org/fastfacts

Content in this material is for general information only and not intended to provide specific tax, legal, or investment advice or recommendations for any individual. Consult the appropriate advisor prior to making any financial decision. No strategy assures success or protects against loss. The return of ESG strategies may be lower than if the adviser made decisions based solely on investment considerations. Investing involves risk including loss of principal.

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