As a socially aware investor who wants investments to reflect certain values, you might look to ESG investment options. ESG stands for Environmental, Social, and Governance and allows you the benefit of choosing investments that align with your views of the world, personal standards and are environmentally friendly. These socially conscious, sustainable investment options are typically categorized into three areas: Environment, Social, and Governance.
At Capstone we design portfolios that include ESG investment options. In general, the investment analysis and portfolio construction consider companies with solid records concerning the environment, social issues, and corporate governance.
Environmentally Sustainable – This category of ESG focuses on the company’s record relating to being a good steward of the natural environment and often includes energy use, waste, pollution, natural resource conservation, clean energy, and treatment of animals. We also look at how investing in a company that is green, global, and eco-friendly benefits your financial goals.
Socially Responsible – This focus typically includes social justice practices including promotion of diversity, economic equality, and human rights. The questions that might be asked are what standards does the company hold hits supplies to? What are the charitable giving practices of the company? How does the company treat its employees? How does the company align investments and values? What are the company’s hiring practices? The focus might also include working conditions, indigenous communities, conflict, health and safety, and hiring/employee relations.
Governance – Governance can address executive pay, corruption, lobbying and donations, board diversity and structure, and tax strategies employed.
The ESG approach seeks to combine moral or ethical return with financial return to better reflect what the investor cares deeply about. While one approach is to focus on a specific theme such as gender representation in leadership positions, another approach might be more holistic in nature.
At Capstone, we help investors align their investment strategy to consider financial returns and align values. Give us a call if that sounds like you.