I had the opportunity last week to be at the SIS Sustainable Investing Solutions conference in Portland. It was an event similar to one I attended back in 2014 that vaulted me into researching and ultimately integrating Socially Responsible Investments (SRI), or Environmental-Social-Governance (ESG) investment criteria into my practice. At that time, I had just established CFS after spending a decade with larger firms.
During those years the message from these firms was that incorporating ESG could only be done at the expense of investment returns. Five years later after the exponential growth of SRI, even the world’s largest asset manager, Blackrock, has now jumped on board offering a lineup of ETFs, along with other ESG investments.
The impressive growth of SRI and increasing opportunities in this arena were highlighted at the PNW event. Even so, additional players in the sector and dollar flows have not eliminated the stigma of lower return. It persists in the minds of most financial advisers and is reflected in the portfolios they manage. It’s probably also the main reason why I was the sole attendee from all of Central Oregon! This false belief of lower returns is opposed to the vast statistical evidence showing that the use of SRI’s can potentially improve returns, mitigate certain risks, and meet public demands for investments that match personal values. Again, this was a central theme among the presenters who also pointed to increased demand. They cited a survey showing that 76% of women and 84% of millennials are looking for socially responsible investments.
Possibly the most significant takeaway was the influence ESG focused shareholder advocacy and proxy voting has made on corporate policies. Nearly 90% of ESG related resolutions brought to corporate boards were approved without requiring a proxy vote. This represents a major shift in the willingness of companies to change based on consumer driven desire for socially responsible practices within the companies they own. In other words, you, as an investor, truly have a voice in the corporate board rooms of America!
Once again, conferences like this one along with current and ongoing statistical evidence confirms that not only can an investor make a meaningful impact on the issues that concern them! And they are also making prudent investment choices in companies that are leaders in their industries, agile and forward thinking, positive members of their communities. These are solid places to grow your dollars!
Jack Schniepp is a CERTIFIED FINANCIAL PLANNER™ (CFP®, ChFC®) and the owner of Cascade Financial Strategies in Bend, Oregon. CFS is a registered investment advisor licensed in Oregon, California and Idaho. They specialize in socially responsible investing which integrates environmental, social, and corporate governance (ESG) criteria into portfolio construction.