There’s never been more interest in sustainable investment or a better time to start investing for social and environmental impact.
Published on January 31, 2022
Photo courtesy of Towfiqu via Unsplash
The New Year is a time when many individuals review their financial goals and investment strategies. The COVID-19 pandemic, the Black Lives Matter movement and the climate crisis, among other pressing concerns, have driven attention to investing as one way to address key environmental, social and governance issues (ESG) while also generating long-term competitive financial returns.
According to the US SIF’s Foundation’s 2020 Report on U.S. Sustainable and Impact Investing Trends, a third of professionally managed assets were invested using ESG criteria, accounting for a total of $17.1 trillion. A 2021 Morgan Stanley study found that 79 percent of all individual investors and 99 percent of millennials are interested in sustainable investing, and a 2019 survey by Natixis underlined the desire of individual investors to customize their portfolios to match their personal values.
This year is an opportune time to create a more sustainable investment portfolio whether that means adding a sustainable mutual fund or investing in a community development bank or credit union.
Individuals engage in sustainable investment for varied reasons. Some seek investment options that overlap with their personal values, such as avoiding weapons, gambling or animal welfare in their portfolio. Others want investments that, like their charitable giving, advance issues such as racial justice, women’s advancement or addressing climate change. And others are simply seeking strong returns—a growing body of academic research points to a strong link between positive ESG outcomes and competitive financial performance.
Below are some options for individual investors interested in sustainable investing.
Saving for Retirement? Invested in Stocks? Do It in Sustainable Investments
For most individual investors, mutual funds and exchange traded funds (ETFs) will be the preferred choice, as they are a familiar investment product—think of your 401k, for example—and there are many choices.
If you are invested in a 401k, 403b or other type of defined contribution retirement plan, take a moment to check if you have sustainable investment options, and if not, approach your employer about adding such funds. Shareholder engagement is another area where sustainable investors are active. Last year saw record-high votes at companies on climate change, …….