What is sustainable investing?

Sustainable investing is an investment discipline that considers environmental, social, and corporate governance (ESG) criteria that strives to generate long-term competitive financial returns and positive societal impact. Examples of ESG criteria can be found here.

Sustainable Investment Assets in the United States: According to the US SIF Foundation’s 2020 Report on US Sustainable and Impact Investing Trendsas of year-end 2019, one out of every three dollars under professional management in the United States—$17.1 trillion—was managed according to sustainable investing strategies.

Motivations: There are several motivations for sustainable investing, including personal values and goals, institutional mission, and the demands of clients, constituents, or plan participants. Sustainable investors aim for strong financial performance, but also believe that these investments should be used to contribute to advancements in social, environmental, and governance practices. They may actively seek out investments—such as community development loan funds or clean tech portfolios—that are likely to provide important societal or environmental benefits. Some investors embrace sustainable investing strategies to manage risk and fulfill fiduciary duties; they review ESG criteria to assess the quality of management and the likely resilience of their portfolio companies in dealing with future challenges. Some are seeking financial outperformance over the long term.

Terminology: Just as there is no single approach to sustainable investing, there is no single term to describe it. Depending on their emphasis, investors use such labels as: “community investing,” “ethical investing,” “green investing,” “impact investing,” “mission-related investing,” “responsible investing,” “socially responsible investing,” and “values-based investing,” among others.

What strategies do sustainable investors use?

Traditionally, sustainable investors have focused on one or both of two strategies. The first is ESG incorporation, the consideration of environmental, community, other societal, and corporate governance (ESG) criteria in investment analysis and portfolio construction across a range of asset classes. Approaches to ESG incorporation include positive/best-in-class screening, negative/exclusionary screening, ESG integration, impact investing and sustainability themed investing. An important segment, community investing, seeks explicitly to finance projects or institutions that will serve poor and underserved communities in the United States and overseas.

The second strategy, for those with shares in publicly traded companies, is filing shareholder resolutions and practicing other forms of shareholder engagement. Sustainable investing strategies work together to encourage responsible business practices and allocate capital for social and environmental benefits across the economy.

How large is the sustainable investing marketplace?

The US SIF Foundation's Report on US Sustainable and Impact Investing Trends identified $17.1 trillion in total assets under management at the end of 2019 using one or more sustainable investing strategies, a 42 percent increase from the $12.0 trillion identified two years prior. This represents 33 percent, or one in three dollars, of the $51.4 trillion in total US assets under professional management tracked by Cerulli Associates. 

ESG at TFG Kauai

At TFG Kauai, we are happy and excited to assist in aligning your investment needs with your personal values and societal concerns. Whether that be investing in renewable energy or avoiding stock for companies that seem to negatively impact the environment on a recurring basis.  Buying shares in a company helps that company to grow and we want our clients to feel good about the companies using their investments to increase their reach and spread their products throughout the world.  Today, there are more options than ever for those of us who want to support socially conscious, sustainable, and ethical business practices, women in leadership, gender equality, and projects that encourage positive environmental benefits. We work to provide our clients increased clarity by offering:

  • Custom-tailored investment portfolios
  • Access to socially conscious investment vehicles
  • Investment advice aligned to your ideals
  • Transparency into your holdings