Sustainable Investing Is Your Next Low-Hanging Fruit

You buy renewable energy and carbon offsets. You pay a living wage and provide great benefits for all employees. You are vigilant about protecting customer data. You may already be a leader in social responsibility and sustainability. But I'd wager that there are still some low-hanging fruit. If you are a sustainability-focused, purpose-driven, benefit corporation or B-corp, sustainable investing has to be on you radar. We can help make sustainable investing your next win.

It's never been easier

Whether it is through a workplace 401k plan or an IRA you manage on your own, doing well while doing good is where it's at. While saving for retirement if you can is always a good idea, it's often a place where people don't realize that they can be doing something good (or bad) every single day. Do you know what companies you are investing in through your retirement plan? For some of us playing catch up with our saving, it means that one of our biggest monthly expenditures is going to support companies that align (or contradict) with our values.

Sometimes it can be as simple as asking your investment advisor or retirement planner to offer more sustainable investment options. Unfortunately, there are still many advisors out there who aren't familiar with sustainable investing. That is changing as advisors and firms recognize the growth in demand for sustainable investing. If you want to make it even easier, and use a data-driven process that engages employees in making more sustainable investments, it may make sense to work with someone with experience helping organizations and individuals align their values with their investments. 

Don't be fooled by old myths

If you've ever asked a financial advisor, a retirement planner, or the HR person who manages your organizational retirement plan about sustainable investing, you've probably heard several reasons why you can't or shouldn't do it. Fortunately, there is plenty of data out there to debunk many of the common myths.

Myth 1: Sustainable investing doesn't offer competitive returns

I've heard this myth repeated over and over again. Despite an ever-expanding body of research and data suggesting otherwise, it still gets repeated. In reality, sustainable investing will make you just as much money or more than traditional investing.

From investing in individual companies, to more sustainable funds, strong sustainability performance means strong financial performance. You don't take my word for it, read some of the studies for yourself! Or take a look at this meta study that evaluated the result from over 2,000 other studies to find a positive correlation between performance on environmental, social, and governance (ESG) criteria and corporate financial performance. 

Myth 2: People don't care about aligning their values with their investments

Survey after survey continue to pile up with the same message: people want to do well while doing good. This is particularly true for certain segments of the workforce.

  • Three out of every four investors are interested in sustainable investing
  • 90% of millennial investors want sustainable investing options as part of their 401(k) plans
  • 84% of women of all ages are interested in sustainable investing

Importantly, Millennials are expected to make up 75% of the American workforce by 2025

Myth 3: There aren't enough sustainable investment options

Fact is that sustainably invested assets now account for more than one out of every five dollars, or 22% of all invested assets, under professional management in the U.S. according to the Forum for Sustainable and Responsible Investment. And according to Morgan Stanley's research, there were 1,002 distinct funds, representing $2.6 trillion in assets, incorporated ESG criteria into their investment decision-making in 2016. You can also use a wide variety of strategies to integrate your values into your investments, including impact investing, shareholder advocacy, and exclusionary screening, among others.

The process of transitioning existing retirement plans like 401k's to integrate more sustainable investment options can also be a powerful employee engagement tool. While you're making changes it's the perfect time to consider other important plan elements including the choice architecture you use.

Colin Price Consulting can guide you through the process of making more sustainable investments. We work with your internal teams and external service providers to make sure that your values as an organization and the values of employees are represented in the investment options available.