We also help clients express individual values on a limited basis when that is requested.  That said, this type of investing is a choice, and we do manage portfolios for clients that may have a relatively mild interest in such investing. In short, we do not overlay our firm bias on client portfolio management as we know this investment lens isn’t for everyone.

Since 2019, there have been $144 billion of net inflows into sustainable funds. Some of the biggest names in the industry are providing sustainable funds.

For those clients who come to us with an interest in sustainable and/or values-based investing, we wanted to give an overview this month of the big picture landscape for this type of strategy.  We closely follow the debate on the topic and wanted to share our view.

Borne out by data, ESG investing is definitely not a fad. Since 2019, according to Morningstar, there have been $144 billion of net inflows into sustainable funds. Some of the biggest names in the industry provide sustainable funds, like BlackRock, Vanguard, Nuveen, and State Street, to name a few. While political regime changes may promote or criticize sustainable/ESG practices, numerous publicly traded companies have some sort of sustainability policies in their corporate framework. According to a study by Harvard Business School, nearly 90% of the S&P 500 do so.

We know there can be some pitfalls in trying to create an ESG portfolio.  For example, an overweighting in technology and an underweighting in energy.  As advisers focused on this space, we view our role as creating a balanced portfolio for our clients that both has a lens of ESG factors and also gives exposure to diversified companies across industries in both the US and overseas.

We view ESG investing as a risk management framework – not “woke” capitalism.  We don’t make claims about whether ESG investing will produce superior or inferior returns because studies have been done that conclude both and timeframes make all the difference.  Instead, we tell our clients that investing with this lens means investing in companies that proactively address ESG issues through their operations and hiring decisions.

Our clients value this type of investing not simply for the values expression but also because as the importance of these issues become more and more apparent, they choose to invest in entities that are looking ahead and planning for resiliency in a changing world.

Next month we will take a more detailed look at how we choose investments (not individual companies, but exchange-traded and some mutual funds).  The landscape is dynamic and sometimes open to interpretation – we put a focus on key factors that provide consistency across our investing landscape.esg