It goes by many names: socially responsible investing, ethical investing, socially conscious investments, “green” investing, SRI, sustainable investing, and impact investing, but all of these approaches consider your financial return as well as social good to create a long-term positive impact.
Whatever name you call it, demand for socially responsible investments is growing and has been over many recent years. According to data supplied by US SIF (The Forum for Sustainable and Responsible Investing) there are nearly $13 trillion invested in some form of socially responsible investing. According to research conducted by Morgan Stanley in 2019, 85% of individual investors and 95% of millennial investors are interested in sustainable investing. And considering the social and environmental impact of your investment portfolio is increasingly seen as a wise approach. This same study showed 86% of investors agreed that environmental, social, and corporate governance (ESG) practices can potentially lead to higher profitability and may be better long-term investments.
Socially conscious investments can be made into individual businesses with a track record for social and environmental responsibility or into ESG investment funds (including ESG focused mutual funds, exchange-traded funds (ETF), or other types of SRI funds. Responsible investors do not ignore financial performance when making investment decisions, rather they and their financial advisors look at the potential for financial return while also considering the environmental and social impact those investments are likely to create.
At Earth Equity Advisors, our portfolios are grounded in solid fundamental economic analysis. We look at price/earnings ratios, debt levels, growth and other important metrics just like any “traditional” asset manager does. But, because we only invest with our values, we also incorporate enhanced socially and environmentally responsible due diligence.