More than 11 percent of investments under U.S. professional management were selected for companies’ financial performance and their social and environmental responsibility in 2012. That’s $3.74 trillion of the $33.3 trillion in investments scanned for environmental, social and governance criteria known as ESG, according to a November report by the U.S. SIF Foundation.Individuals and institutions are increasingly on the lookout for investment strategies that help them achieve environmental and social goals.Call it what you like — sustainable investing, responsible investing, socially responsible investing, impact investing, green investing or just ESG — this practice is bringing new approaches into the traditional investment industry. The field has expanded tremendously since trail-blazing funds, such as the Dreyfus Third Century Fund and the Pax World Fund were launched in the early 1970s. Today, sustainable investors might be concerned with climate change, alternative energy, human rights, diversity, community investing or other issues. We have seen a blossoming of specialized advisors and consultants and new investment products across all asset classes.Many studies have shown that sustainable investing does not mean additional risk or compromised returns. To cite just one paper, Deutsche Bank last year reviewed 100 academic studies of socially responsible investing and found that companies with high ESG ratings also have a lower cost of capital for both debt and equity pdf. It also found that funds dedicated fully to sustainable investment fared as well as conventional funds.Major investment management firms recognize that current and potential clients have a growing interest in sustainable practices. Nearly 1,200 asset owners, investment managers and professional service partners have signed the United Nations-backed Principles for Responsible Investment and are starting to disclose their ESG performance. Eighty-two U.S. money managers with $4.9 trillion in assets ask portfolio companies about ESG issues. Just 54 managers, with $3.8 trillion in assets, reported doing so two years earlier, according to the U.S. SIF Foundation.Some small and family foundations have already rethought their endowment investments or stepped up shareholder engagement with portfolio companies in light of their missions. They include the Needmor Fund, Jessie Smith Noyes Foundation and the Wallace Global Fund. Some larger foundations, such as the W.K. Kellogg Foundation, are also committed to investing in alignment with their mission.Sustainable investment is growing because investors and other stakeholders recognize its ability to deliver returns and influence corporate behavior. Investors have persuaded publicly held companies to disclose their risk from climate change, adopt sustainable forestry practices, check runaway executive pay and address labor and human rights conditions in their supply chains. They have encouraged investment strategies that promote economic development and expand financial services in poor communities.Many consumers already think about the sustainability of the products they buy, their commutes and what they eat. It’s natural to extend that logic to their investment portfolios.The practice may be less intuitive but is no less important for institutional investors. Their decisions can help advance a more sustainable and equitable economy.Woll is CEO of U.S. SIF: The Forum for Sustainable and Responsible Investment, which holds its annual conference in Chicago next week, and the U.S. SIF Foundation.
via Call It What You Like — New Investing Approach Gains Followers – Bloomberg.
Are you interested in screening out certain types of investments in your 401(k)? Considering going Fossil Fuel Free but nervous you will under-perform by not owning energy producers? This webinar slide-deck walks through how portfolios can avoid Carbon Risk and not sacrifice returns.
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From SVN’s website:
SVN Member company Social(k) offers this valuable step-by-step guide on how to get your employer or organization to add Socially Responsible Investments to a retirement plan. Please download and make use of it. Here’s what you’ll find:
- An outline of what a retirement plan involves.
- What the pieces of this sometimes confusing puzzle are.
- Who does what. How to add Socially Responsible Investing, and why.
- What the steps are to add a new employee benefit or change an existing one to better reflect your organizations DNA.
Green America went through this process and the employees decided to choose Social(k) as their 403(b) plan. With that experience we bring you this guide to use when beginning the discussion at your place of employment.
Download the 18 Page guide here
An excerpt from the SRI-Retirement-Guide:
Whether you are an employer or an employee, you’ll want to understand the benefits of offering employees a retirement plan with investments aligned with the employer’s and/or employees’ mission or ethics and their investment goals. It is important to state the benefits of SRI in order to better support the business’s mission and to strengthen the case for SRI in your retirement plan. Reasons for offering SRI retirement options include:
Having a retirement plans that reflects the employer’s values or mission (for example, if you are a producer of solar panels, chances are you want to eliminate or reduce investments in fossil fuels).
Helping to strengthen the employee’s long-term financial well-being by providing greater investment choice by adding SRI to an existing plan.
Building employee morale and staff retention by expanding the benefits package.
Providing an important employee benefit of enduring value since numerous studies have shown that SRI investment returns are competitive with conventional funds over the long term.
According to a September 2011 report by the US SIF Foundation and Mercer, US defined contribution retirement plans that offer SRI options could double in the next three years.2 The results of the survey indicate that four out of five plan sponsors respondents (84%) believe that demand for SRI retirement options will increase or remain steady during the next five years. It is clear that more and more employers are considering SRI, especially in response to employee demand. In fact, legislation has been introduced to make SRI options available to federal employees.
via How to Get Your Employer to Offer SRI Options – SVN Imapct Blog.