Five reasons why you need to use ESG investments
1) A large portion of investors are doing it
Check out this chart from the Visual Capitalist
You'll see that the amount of money invested into ESG investments has more than doubled in the seven years between 2012 & 2018.
Blackrock reports over $11 Billion in new ESG investments in the first half of 2020 which is more than double the $5 Billion of inflows for all of 2019!1
ESG investments have seen record amounts of inflows in recent years.
This is not a trend. This is the future of investing.
2) It's the way of the future
Many stock exchanges are now mandating ESG disclosures for companies listed on their exchange.
More and more pension funds are divesting from fossil fuels and adding more weighting to ESG measurements. 2
Mid 2019 at the Business Roundtable, 181 of the worlds largest CEO's signed a pledge to focus on stakeholders rather than just shareholders.
Blackrock CEO and Chariman Larry Fink stated:
With the impact of sustainability on investment returns increasing, we believe that sustainable investing is the strongest foundation for client portfolios going forward.
It is estimated that Millennials will inherit roughly $30 Trillion of wealth from Baby Boomers.
A Morgan Stanley study showed that 95% of Millennials have expressed an interest in ESG Investing. 3
3) You may get better performance
Many studies have shown that ESG Integration can have a positive effect on a company's financial performance. 4
One of the longest running sustainable investment funds, the Pioneer Fund has a track record going back to 1928 and it outperformed the S&P 500.
Source: Amundi Pioneer Asset Management
4) It's the type of investing you actually want
Corporate executive pay is often times tied to short-term stock performance. This can lead to taking on undue risk to satisfy shareholder stock performance expectations.
ESG risk & opportunities on the other hand are often realized over the long term.
Most of us tend to be buy and hold investors, often times owning companies or portfolios for a very long time.
If you're going to buy a basket of companies to own and support for years,
Wouldn't you prefer to own companies with long term positive incentives and a deeper sense of purpose?
5) We can't afford not to
Climate change is real. For our long term survival we need to use investments that support positive Environmental change and decrease our reliance on fossil fuels.
Social inequalities are clear and present. In order to lift up our voices, we need to support companies with strong Social & Governance policies.
Promoting gender and racially diverse boards, C Suites & leadership. Using ethical & sustainable sourcing and diverse supply chains.
If you want to talk more about ESG Investing, but don't know how to get started feel free to schedule a phone call. We're happy to help...
We're a different kind of financial firm than you may be used to.