You voted. You may have knocked on doors, wrote postcards, made phone calls and donated money. You were committed to making a difference in your district or your state.
Here’s another area where you can make a difference: your investment accounts. Your investments can be a powerful way to support the issues that matter to you.
Many people are turning to sustainable investing, which seeks to generate competitive financial returns and make a positive impact, too. Sustainable investing is also known as socially responsible or ESG investing. It now accounts for one out of every four dollars under management in the U.S., according to the U.S. Forum for Sustainable Responsible Investment (USSIF)’s 2018 trends report. Total assets grew 38% in the last two years alone.
Take action on climate change, terrorism and corruption
Sustainable investing isn’t only about the environment. It covers a wide range of issues that fall into three broad categories: environmental, social and corporate governance (ESG).
ESG includes some of today’s most pressing concerns, including climate change, terrorism and corruption, and USSIF’s trend report found that these are precisely the areas that money managers are focused on. Their top environmental concern was climate change and carbon emissions. When it came to social issues, they tried to manage conflict risk by avoiding investments in terrorist or repressive regimes. For governance, corruption was the leading consideration: advisors targeted companies that were transparent and had policies in place to avoid corruption.
Many money managers are also looking at firearms: USSIF found a five-fold increase in restrictions on weapons investments. Faith-based institutions and money managers are working to make a difference. Are you?
Investing in companies that have strong ESG practices is one way you can try to make a difference. Another way that portfolio managers and institutions make an impact is by engaging with management to encourage companies to improve. Some times positive change occurs just from bringing issues to light. Some issues become proposals for shareholders to vote on.
USSIF reported that the majority of the proposals filed from 2016 to 2018 came from faith-based institutions and money managers. In the past few years, their proposals pushed companies to be more transparent by disclosing their spending on political efforts or lobbying. They also used the shareholder proposal process to ensure companies were addressing the risks from climate change. And they helped companies move forward on issues around labor, employment opportunities and executive pay.
Not every proposal gets enough votes to pass, but USSIF found that the number of proposals that “receive high levels of support has been trending upwards.”
How can you get involved?
If you’re someone who wants to use your investments to support the issues that matter to you, here are a few ways you can get more involved.
Ask your advisor about sustainable investing. If you work with an investment advisor, ask him or her about sustainable investing. Many advisors wait for their clients to bring it up.
Look into sustainable mutual funds. You don’t have to be an expert in sustainable investing. There are a growing number of mutual funds (including the fund that my firm manages) that do it for you: these funds seek out investments that have strong environmental, social and governance (ESG) practices.