The Increasing Demand for Sustainable Investing

Sustainable investing is a way of investing by evaluating companies on their environmental, social, and governance record, in addition to traditional ways, like looking at earnings and other financial factors. This type of investing has been growing rapidly, with a record number of new mutual funds launched in 2018, according to recent data by the US SIF: The Forum for Sustainable and Responsible Investment.

There are several reasons for this growth. First of all, as more people become aware of their impact on the environment and choose to engage in more sustainable, environment-friendly living, investors are also realizing they can match these same values with their investments. For example, someone who is committed to recycling and minimizing waste is likely to not want their investment dollars supporting the Environmental Protection Agency (EPA) violators. As investors become more educated about companies that are in their traditional investment portfolios, they realize some of these companies don’t align with their values.

A Focus on Positive Impacts

According to Morningstar, a global financial services firm, sixty-three percent of sustainable funds finished the year 2018 in the top half of their respective categories. Sustainable stock funds also held up better than their conventional peers in a negative market. These results encourage responsible corporate behavior, which can result in less negative externalities.

As more products become available that are managed in sustainable ways, investors are provided a larger range of choices. Not only were a record number of new funds launched in 2018, some existing funds have begun increasingly adding sustainability criteria to their process. Many exchange traded funds (ETFs), or an investment fund traded on a stock exchange, have begun in this same time frame. With more investment firms focusing on this movement toward lessening their environmental impact, there is more educational material on and promotion around sustainable investing. In a market where sustainable investing used to be concentrated mainly by institutions, there is now an uptick in investment choices for an individual investor.

Match Your Investment Dollars to Your Values

Sustainable investing is a way to match your investment dollars to your values. Historically, performance has shown that you don’t have to reduce your return expectations to invest this way. In 2019, numerous investment vehicles are available to individual investors through individual stocks and green bonds, mutual funds, and exchange traded funds.

To better understand how your investment dollars can contribute to the greater good and align with your values, please contact a Sikich Financial advisor for assistance in choosing the investment vehicle and company that is right for you.

Advisory services offered through Sikich Financial, an SEC Registered Investment Advisor.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

About the Author