Does Sustainable Investing Help or Hurt Returns?

Wednesday, December 13, 2017

The rationale for sustainable investing makes sense for more and more investors:

  • Emphasize material environmental, social, and governance issues that contribute to more-thorough financial analysis
  • Focus on the long term, taking into account the impact of decisions on an extended sphere of stakeholders, including the planet itself
  • Direct investment to areas that need it as the world transitions to a low-carbon economy
  • Encourage more responsible corporate behavior, which makes firms more attractive to talented workers and thus more competitive, enhances intangible value in a social media environment that magnifies corporate missteps, and strengthens confidence in the financial system overall.
But despite that strong rationale, which has attracted trillions in assets under management globally to sustainable investments, one of the main concerns many interested investors still have about sustainable investing is “Will it hurt my returns?”
Photo courtesy of fsecart.

Source: Morningstar (link opens in a new window)

ESG, impact investing