People who are willing to take action drive positive change. As more individuals look to use their portfolios to make an impact, sustainable investing has started to make a name for itself.
Sustainable investing is change-motivated money management. It is an approach that considers non-traditional factors when choosing which companies and industries to invest in, such as the ability to create value for customers, the benefits of a product or service to society, or the ability to steward natural resources well. Sustainable investing makes a positive impact in the community and the world.
Sustainable investing is becoming increasingly popular. According to the US SIF Foundation’s 2020 Report on US Sustainable and Impact Investing Trends, one out of every three dollars invested in 2019 was managed according to sustainable investing strategies. This was a 42% increase from 2018, indicating that sustainable investment strategies are becoming more widely considered by individual and institutional investors.
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There are three main approaches to sustainable investment strategies: “avoid,” “embrace,” and “engage.”
Avoidance strategies seek to restrict investments with exposure to products or services such as abortion, pornography, gambling, tobacco, alcohol, or predatory lending.
Embracing strategies focus on identifying investments that make positive contributions in areas like product safety, employee health and well-being, consumer privacy, and energy efficiency.
Engagement strategies seek to influence companies through shareholder activism and corporate governance to encourage positive change.
Early measurements of sustainable investing began in the mid-1990s, estimating assets totaling $639 billion. In 2020, this number exceeded $17 trillion. Some of these assets include public equity investments (stocks), cash, private equity, venture capital, and real estate.
Sustainable investing is motivated by a desire to profit AND to align with principles, personal values, and institutional missions. While financial performance is a crucial part of investing, more and more individuals and institutions are also looking to contribute to advancements in social, environmental, and governance practices.
Investors can make a significant impact with their investments in a way that still prioritizes returns.
Values-based investing is OneAscent’s way of making this concept actionable and personal for our clients, allowing them to incorporate and align their deepest core values with their investments.
Investors can take a more holistic view of their investment, retirement, and financial planning strategies by articulating their values to reach their desired outcomes, both financially and ethically.
Some areas investors actively avoid promoting or profiting from include:
Many values-driven investors avoid companies that promote and profit in these areas because they believe these areas don’t adequately value and respect the dignity of human life.
Areas that values-based investors seek to promote through investment include:
These examples typically utilize the “embrace” or“engage” approaches, allowing a client to further integrate their values and thereby invest in ways that positively impact the world.
Because there is a lack of transparency in the average portfolio, many individuals and institutions are often unaware that they are profiting from companies promoting products and services that directly conflict with their values.
Values-based investing starts by identifying what individuals are passionate about and builds a financial plan around investments that promote these values. It helps investors find both clarity and confidence in their planning, investment, and stewardship decisions.
OneAscent Wealth helps individuals and institutions identify their personal or missional values and designs investment solutions to achieve those desired outcomes. To learn more about your investments and whether they align with your values, visit our Analyze My Investments Tool! If you want to know more about our customized solutions and values-based approach, find an advisor near you!
Past performance may not be representative of future results. All investments are subject to loss. Forecasts regarding the market or economy are subject to a wide range of possible outcomes. The views presented in this market update may prove to be inaccurate for a variety of factors. These views are as of the date listed above and are subject to change based on changes in fundamental economic or market-related data. Please contact your Financial Advisor in order to complete an updated risk assessment to ensure that your investment allocation is appropriate.