The concepts of socially responsible investing (SRI) and impact investing grow in popularity more and more every year. Environmental, social, and governmental (ESG) criteria assist investment managers in finding financial opportunities that their clients can confidently say yes to. Some people argue that ESG investing limits profit, and therefore, goes against a financial advisor’s fiduciary duty. We beg to differ.
As interest in impact investing continues to rise, more research is being done that back up its effectiveness. The information that is being published suggests that good corporate sustainability performance is actually associated with good financial results. With diligence, research, and laser focus, it is possible to identify companies that meet criteria for performance and for their ability to make a positive impact on societies around the world.
An example of ESG factors that many now consider
Because of the growing concern about the state of our natural environment, which is warranted with scientific certainty, there are plenty of businesses out there making positive changes. From companies using partial solar power to the companies that actually make the solar panels, there are many guilt-free investing opportunities. Not only are corporate entities out there making
Socially responsible investing has been going strong for over a decade, so while cynics may argue that examining ESG factors is just an investing fad, the upward trend would suggest otherwise. With modern technology, it’s pretty easy for individual investors to do enough research on their own to know that they want their savings and investments to reflect their values. Technology also makes it easier for researchers to gather and process non-traditional financial information.
With accurate information and clients who know what they want, financial advisors can use ESG criteria with little to no problems. While using these factors is not the primary focus of