Glenn Kenes: Sustainable investing: A way to align your values and your investments
May 6, 2018
Here is a short and sweet, as I am often described, article about a topic that seems to be of greater interest to many of our clients.
For an increasing number of investors, investing is not just about selecting opportunities that do well in their portfolio. It's about owning investments that also make a positive social impact.
Sustainable investing is a growing niche of investment practices designed to help investors achieve both objectives. If you are curious about how to align your values with your portfolio, read on.
Strong upside potential
Compared to traditional investing, sustainable investing takes a different philosophical approach to the marketplace. The concept of sustainability is rooted in the belief that in order to thrive businesses must make responsible choices regarding the environment, society and their business operations.
Similarly, ignoring these areas may eventually have the potential to negatively impact a business' bottom line. Those who agree with this approach believe that sustainable investing offers reasonable potential for growth and profitability.
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To effectively evaluate the choices companies are making, investors focused on sustainability are calling for increased transparency from executives about their priorities and how they conduct business.
In response, more companies are creating sustainability initiatives, engaging with the community on societal topics, and promoting their accomplishments to attract investors.
Sustainable investing is personal
Investing with a social conscience can take a variety of approaches, allowing you to determine the ideal strategy for your beliefs and financial situation. Some common strategies include investing in companies that:
Promote causes — firms that prioritize sustainable practices as part of their growth strategy may be attractive to investors. Examples include firms reducing their carbon emissions, partnering with charities or promoting the welfare of children or animals.
Pursue solutions to a long-term societal issue — investors may want to support companies researching or innovating ways to solve problems. Cancer research, driverless cars, or educating consumers on a key issue are several examples.
Operate responsibly — companies that demonstrate accountability to high ethical standards may also be of interest to investors. Relevant topics may include fair employment practices for women, valuing diversity, or engaging ethically with vendors in a company's supply chain.
Avoid activities you find detrimental to society — this "negative screening" process may include staying away from firms that don't share your values or have a harmful impact on society or the environment. Examples may include alcohol, fast food, tobacco or gambling stocks.
As sustainable investing continues to gain traction among firms and investors, watch for more opportunities to customize your investments according to your preferences.
If this investing approach interests you, talk to your financial advisor to learn more about how you can align your investments for growth and for good.
Glenn Kenes, CRPC, is a Private Wealth Advisor and Managing Director of Barber Kenes Retirement Solutions a private wealth advisory practice of Ameriprise Financial Services, Inc. in Auburn. He specializes in financial planning and asset management strategies and has been in practice for 23 years. Contact him at: BKRetirementSolutions.com or 530-823-0710, 470 Nevada Street, Ste. 200, Auburn.