A couple things that have guided my life is to serve others and “pay it forward”. Whether it is helping children with special needs through West Madison Little League, serving the community through Blackhawk Church, or being involved with Sustain Dane, it seems like there is always something on my plate. I wondered, “how can I take these principles and apply them to my career?”.
When it came to my day-to-day work, sustainable investing was something that I could incorporate into my business that encourages progress in the form of investments. Sustainable investing has been something I have been passionate about and have brought to clients ever since I have been in the financial planning industry. The investing world typically uses three overarching variables that fit into sustainable investing: 1) Environmental 2) Social and 3) Governance, or ESG for short. I realized that not only can I help people with their financial goals, but I can do it in a way that helps them align their investments with their values.
Incorporating your values into your investments
Many people love the idea of investing in a way that aligns with their values but do not know how. They (incorrectly) believe that if they want to retire they will have to make a deal with the devil and invest in whatever the stock market offers. Incorporating ESG into a portfolio helps one invest in companies that are taking their corporate social responsibility seriously. I started to educate my clients and the general public that they should start by identifying the things that they want (or don’t want) in their portfolio. One example could be clean energy organizations. Next, they need to start understanding what investments they currently own. Finally, I help them improve their portfolio so it is better aligned with their values.
Will I suffer financially by investing in a sustainable manner?
What about the numbers? The most common question people ask is “will I sacrifice returns?”. Assuming that the portfolio is well diversified you do not have to sacrifice returns. As a matter of fact, studies from Harvard, TIAA, and Barclays, to name a few, show that investing in ESG may outperform their benchmark in the long-term and that they offer better protection on the downside than a traditional investment portfolio. The market for ESG funds is growing exponentially. Depending on if you ask USSIF or McKinsey, estimates point somewhere between $10 – 20 trillion (with a T) are invested in ESG funds. That number is continuing to grow. Sustainable investing is here for the long run and will continue to transform where investors put their money in the future.
Thank you for reading; please reach out if this is a topic of interest!
Financial Advisor at Walkner Condon Financial Advisors