According to a 2018 Harvard study, socially responsible investing now accounts for $26 trillion.
Morningstar reports there were 234 ETFs and mutual funds at the end of 2017 that invested in a socially responsible way, doubling since 2012.
Sustainable investing seeks to drive positive social or environmental impact alongside financial results, allowing investors to accomplish more with their money.
Investors need to adjust their financial goals to invest with a purpose in order to drive positive environmental and social impact.
What is driving the shift towards ESG investments
Demographic shifts
A new generation of investors, including millennials and women, seek to put their money to work with purpose and want their investments to reflect their social and environmental concerns.
Government policies
From COP21 to Canada’s carbon tax and France’s new energy transition law, sustainability-related regulations are driving investing in renewables and reporting on social and environmental considerations.
Evolving views on risk
A growing number of investors believes that how a company manages the environmental and social aspects of its business can be signals of operational efficiency and productivity.
Separately, U.S. Trust found that 76 percent of high net-worth millennial and Generation Z investors have reviewed their assets for ESG impact, while Morgan Stanley found millennial investors to be twice as likely as others to invest in companies that incorporate ESG practices.
Sources:
– MSCI as of 5/31/2017. Index returns are for illustrative purposes only. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. Index returns do not represent actual Fund performance
– Sustainable Investing is simply Smart Investing – Black Rock
– How socially conscious young investors are putting their money where their ideals are _ Brandon Gomez
