So, while I might not have come home relaxed (it was a family trip after all), I returned re-energized to work with clients on their socially responsible investing (SRI).
SRI is a rapidly emerging investing style that seeks to combine social change with performance returns.
Investing with intent, purposeful performance, money that matters … one might think that these buzzword phrases will prove SRI to be simply another passing fad du jour.
However, based on my educational and practical experience in the field of wealth management, it is my opinion that the practices of investor intentionality and aligning investments with personal values are proving to be quite sticky indeed.
According to the US Forum for Sustainable and Responsible Investment’s 2022 trends report, $8.4 trillion of professionally managed assets in the U.S. was invested in a sustainable manner, up from around $3 trillion in 2010.
Source: US SIF
U.S. SIF first started tracking this data with their inaugural trends report in 1995. At that time, $639 billion was reported as being sustainably invested in the US. Growth continued to climb steadily until around 2012. From 2012 to 2020, we see the most robust growth that has occurred since the trends report was first published.
Source: US SIF
One of the least surprising trends is that climate change and carbon emissions remains one of the top criteria for selecting SRI investments among money managers and institutional investors. This comes at no surprise when research demonstrates that according to Bloomberg almost 10% (or 5 million) deaths globally can already be attributed to climate change. Based on our current trajectory, this trend will continue its increase.
At Parsec, it is one of our core beliefs that we should help our clients achieve their goals and align their financial journey with their values. One of the ways we answered this call to action was to introduce our socially responsible investing portfolio in 2020.
While there are many ways to be socially responsible, including evaluating companies for their carbon footprint, one of the ways that Parsec can move the needle is by evaluating each company’s social and corporate governance standards in additional to their environment standards (ESG), and then clearly communicating the results to enable clients to make the best decisions possible.
SRI considerations have not traditionally been incorporated into financial analysis, but ESG-related factors are increasingly recognized as relevant and material to financial performance. For investors and companies, ESG factors represent not just a means to mitigate risk, but also a source of opportunity in a portfolio.
There is much to consider when selecting an investment strategy that aligns with your values. To learn more about socially responsible investing, I encourage you to explore the US SIF website. I also encourage you to watch a webinar below that I gave earlier last year on the topic, or visit our website: parsecfinancial.com/socially-responsible-investing.
Ashley Gragtmans, CFP®, BFA™, CSRIC®
Senior Financial Advisor
Disclaimer: Some of the information in this article is provided through linked websites. Links on this website are for informational purposes only. We do not endorse the content nor the products of these linked websites.
Socially Responsible Investing (SRI, also known as Environmental, Social Governance – ESG) strategies prioritize ESG criteria over other investment criteria. As a result, such strategies will be more limited in the number and types of investments available and may perform differently than strategies that do not screen for ESG factors. Socially responsible investing is qualitative and subjective by nature, and there is no guarantee that the criteria utilized, or judgment exercised, by Parsec Financial will reflect the beliefs or values of any one investor. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful. Past performance is not a guarantee or reliable indicator of future results.
