The early actions of the Biden administration are falling right in line with expectations regarding climate related policy and its impact on Socially Responsible Investing. (Socially Responsible Investing implements additional investment evaluation criteria – specifically related to the Environment, Social issues, and Governance . . . ESG). On Inauguration day the President ordered an immediate review of federal regulations passed in the last four years that conflict with the national objective of confronting the climate crisis. Companies that are already prepared to meet the stiffer regulations that are expected, will have a distinct advantage over those that have not subscribed to ESG standards. This new political and investment environment, combined with the growing demands for ESG options from individual investors should be catalysts for continued growth in Socially Responsible Investing.
Once again we must also point out that ESG makes sense on many levels! Even if an investor does not fully embrace some of the ideologies involved, it’s clear that directing dollars towards these types of investments may provide a solid chance of strong returns. When policies and government spending move in a certain direction, it’s usually wise to follow that flow from a purely investment standpoint.
We’ve directed our readers over and over again to the extensive research showing that investing responsibly does not mean you will have to accept lower returns. In fact, there is a strong case to be made that the opposite is true. It seems that this trend will be moving in only one direction now that fiscal and monetary policies are coming into place to fully support ESG investing! There are many options for individual investors to participate. Below are a few large funds that have performed well over the past year compared to their peers and on a risk adjusted bases:
$23.3 billion Parnassus Core (ticker: PRBLX)
$13.3 billion iShares ESG Aware MSCI USA (ESGU)
$10.8 billion Vanguard FTSE Social Index (VFTNX)
We look forward to what 2021 has to offer in the world of Sustainable, Socially Responsible and Impact Investing!