Let me say right up front that research shows sustainable investing provides competitive returns.
The myth that investors must sacrifice performance to invest with their values is just that—a myth.
A growing number of academic studies have demonstrated that ESG mutual funds perform competitively with non-ESG funds over time.
Why Sustainable Investing?
Why should you start integrating ESG products into your allocation process?
- Research indicates 83% of the US population can be categorized as some shade of green.
- The LOHAS (lifestyle of health and sustainability) segment represents approximately 19%, or 43 million!
- ESG investing is moving into the mainstream: Advisors have a wealth of academic research showing that clients can get competitive returns while making a difference.
- Mainstream financial companies continue to increase their ESG products and platforms, and sustainable investing companies continue to develop cutting edge products (clean tech, water, ETF’s), making it easier for advisors to create high-performing portfolios that can meet modern portfolio theory criteria.
- Incorporating sustainable investing options into client portfolios will continue to help advisors grow their practices even in a difficult economic environment.
According to research compiled by USSIF, the Forum for Sustainable and Responsible Investing, at the end of 2015, assets of institutions that consider ESG criteria in investment analysis and portfolio selection totaled $5.02 trillion, or 58% of total ESG assets.
A growing concern about portfolio risk from climate change is one of the major drivers in ESG incorporation among money managers. Also, investor demand is increasing for portfolio opportunities in clean and green technology, alternative and renewable energy, green building and responsible property development, and other environmentally driven businesses.