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Earlier this year, TruValue Labs (creators of Insight360 SASB ) laid out the top 10 reasons Wealth Advisers and Managers are following investor demand to ESG.
The next question: how do ESG, or environment, social, and governance investments, perform? When do these strategies work, and why?
Here’s a look at the circumstances under which ESG-related investing works the best, across different asset classes such as stocks and bonds.
By MaryAnn Busso
July 10, 2017
Investing for good can also be a good investment. A number of the mutual funds that take environmental, social and corporate governance (ESG) into account when making investing decisions have proven to be stellar performers. Two of our top 10 ESG funds—selected using a formula that takes 1, 3 and 5-year total returns into account—beat the S&P 500 over all three periods. Investors are taking notice: Investments in these funds are up 33 percent in the U.S. since 2014, to $8.7 trillion. That’s 22 percent of all professionally managed U.S. assets. Harvard Management Co., which oversees Harvard University’s $36 billion endowment fund, recently announced plans to make sustainability the driving factor in selecting new investments for its natural resource portfolio.
Alternative investment firm Bain Capital is betting that mission-led investing can deliver returns on par with its standard private equity pools.
Also inside: Vanguard’s votes on climate change are up for their own vote; Big oil is waking up to EVs; Deloitte is beginning to shift away from traditional approaches built around gender, race, or sexual orientation.
These changes are happening – denying them just puts a company further behind in adapting, and that means a drag on productivity and returns. Selecting your investments to include (or only contain!) companies that are addressing these changes and adapting TODAY not only contributes to a better future, but better returns.
Why be concerned about safety when there is money to be made from burning fossil fuels?