Responsible Investing

Five misconceptions you might have about responsible investing (RI)

 

Little appeal for most investors.
Responsible investing interest and assets are growing, all over the world. More than $21.4 trillion of AUM have had ESG criteria applied to them, and RI assets in the United States alone make up $6.57 trillion.1 In a recent Nuveen study, eight in ten (80%) affluent investors would like their investments to deliver competitive returns while also promoting positive social and environmental outcomes.2

 

RI is about excluding controversial companies.
RI is multifaceted and is becoming more so every year. RI can actively seek companies with certain social impacts, or it can be applied across entire industries, taking a holistic view of each company’s activities within that industry. RI also involves shareholder advocacy or a range of corporate governance activities.

 

RI is like a charity.
Responsible investing isn’t charity. It’s still investing; you are not giving money away as you would to a charity. The fact is that you should evaluate RI options as you would any other investment, ensuring it fits with your goals, and has the potential to achieve a competitive return alongside its positive social outcomes.

 

RI means sacrificing performance over time.
Investors aren’t willing to sacrifice financial returns for social ones – they want to have their cake and eat it too. Thankfully, the performance of RI may help you meet the dual demands for performance and social impact.

 

Large-cap stocks are the only way to access responsible investments.
ESG criteria have been applied across different asset classes, and across both public and private markets. A close look at the universe of options is likely to bring an array of appropriate options to the surface.

 

Income-Oriented Investing Bonds add balance
Municipal bond investing How might management fees impact portfolio yield?
Investment Outlook Where are we in the credit cycle?
1 USSIF (The Forum for Sustainable and Responsible Investment), 2014 Global Sustainable Investment Review, 2015. Affluent investors are defined as U.S. residents over age 21 with $100,000 in investable assets (excluding workplace defined contribution accounts or real estate), who consider themselves the decision maker for financial decisions and who currently work with a financial advisor. 
2 Nuveen, Third Annual Responsible Investment Study, 2017.