Interested in learning more about Sustainable (ESG) Investing?
Are you one of the growing number of investors who want to align their investments with their values? If so you are in the right place because Sandbox Financial Partners has a strong commitment to sustainable investing.
Sustainable investing goes by many names each with a slightly different emphasis. The most common is Environmental, Social, and Governance (ESG) investing. In addition to ESG investing you may be familiar with Socially Responsible Investing, Impact Investing, Gender Lens Investing, Faith Based Investing, and Green Investing. Whatever the name, sustainable investing considers not only the traditional profitability metrics in making investment decisions but also broader sustainability (ESG) factors. Taking these broader sustainability factors into consideration has been shown to be highly effective in measuring investment risk.
What sort of investment returns can I expect from a sustainable investment portfolio?
Investment professionals now generally accept the idea that sustainable investing can produce comparable returns. In fact, the highly respected independent market research firm Morningstar concluded sustainable investing "can lead to better risk adjusted performance at the portfolio level."
What is a sustainable company and what does a sustainable portfolio look like?
Certainly an important part of a sustainable portfolio are investments in renewable energy companies and next generation technologies that will combat the climate crisis. A good example is Vestas Wind Systems, a Danish company which is both the largest manufacturer of wind turbines in the world and since 2013 has used 100% renewable energy in their manufacture. In addition to companies like Vestas, a sustainable portfolio will include companies that standout for their ethical and transparent corporate practices.
In fact, a sustainable portfolio constructed by Sandbox Financial Partners will be just as diversified as a traditional portfolio. For instance, a sustainable portfolio could include a cutting edge high tech company that is a leader in promoting workplace diversity or a fast growing clothing company that is careful that its suppliers in developing countries pay fair wages and provide a safe working environment.
Does sustainable investing produce a positive societal impact?
Sustainable investing can have a positive impact on people and planet by driving more investment capital into socially and environmentally beneficial purposes. Likewise, through shareholder engagement, sustainable investors have been very effective in convincing publicly traded corporations to adopt a host of forward thinking business practices. Another way that sustainable investors can have a positive impact is through purchasing social impact bonds that finance community development projects such as affordable housing and loans to small scale entrepreneurs. For some examples of how these social impact bonds can improve opportunities available to women and other disadvantages individuals, see the article in Kiplinger.com by Sandbox's VP for Sustainable Investing. For all these reasons Sandbox believes the more sustainable investors there are, the greater the positive impact there can be.
Nuveen Investments has provided a report on ESG that we believe is a good summary of why there may be a place in your portfolios for these types of investments. You can read the report here.
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"Where capital goes over the next 15 years is going to decide whether we're actually able to address climate change and what kind of a century we are going to have."
—Christiana Figueres,
Executive Secretary of the UN Framework Convention on Climate Change
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VP, Sustainable Investing and Financial Planning
William Bruno is a VP, Sustainable and General Investing and Planning at Sandbox Financial Partners. He has worked as a financial advisor for over 15 years and has developed a deep understanding of sustainable (ESG) investing. His expertise and knowledge in the world of socially responsible and impact investing adds an important and growing niche to Sandbox and its client’s investing interests. Will has also served on the Episcopal Diocese of Washington's Committee on Socially Responsible Investing. In addition he has also published several articles on sustainable and impact investing, most recently in Kiplinger.com. Will and his two sons live in Bethesda, MD.
What should I do next? If you are curious about learning more, we are happy to review your portfolio. We can evaluate your portfolio’s strengths and weaknesses, its level of risk, and the types of companies you are invested in. We would then review with you a portfolio that would more closely match your beliefs while still providing comparable opportunities for growth. And we could make sure your investments are part of a larger, comprehensive financial plan.