Through sustainable investing, not only can investors aim to make a positive impact on society and the environment, they can potentially improve the risk/return characteristics of their portfolios by factoring environmental, social and governance (ESG) criteria into their investment decisions.

Objectives:

• Encourage positive environmental, social or governance practices
• Align investments with personal values
• Potentially improve portfolio risk/return characteristics

 
Desired Outcomes:
Whereas conventional investing is focused on risk/return, and philanthropy seeks solely to benefit charities and causes without return or income consideration, sustainable investing looks to accomplish both in varying degrees along a spectrum of possible outcomes.

The paths to pursuing effective global stewardship and possible growth are coming together in the investor mindset. Sustainable investing, when incorporated into a well-defined, long-term investment plan, can be a powerful tool in addressing global challenges while achieving personal financial goals.

Investors may consider sustainable investing for a host of reasons:

• Risk Mitigation: Companies that ignore their social and environmental impacts may face regulatory and governance risks.
• More conscious approach to investing: Investors may aim for a positive impact or avoid ties to questionable activities
• Long-term performance: Companies with a negative reputation or poor business practices may not be sustainable.
• Align investing with personal or religious views: Investors may not feel comfortable investing in companies whose business practices they view as morally objectionable
• Fiduciary duty: Professional asset managers have a responsibility to invest within certain standards that represent their clients’ interests, which would likely make investments in companies with unsustainable practices less appropriate.