Investment10 Things You Should Know About Sustainable Investing

September 29, 2022by Bailey Wealth Services

Sustainable investing is becoming more mainstream. Here are some key things to consider.

number one

1

Terminologies May Differ – There are many approaches under the sustainable-investing umbrella. Examples include socially responsible investing (SRI); environmental, social, and governance (ESG) integration; and impact investing. There isn’t currently a uniform definition of these terms and different asset managers may define them differently.
number two Socially Responsible Investing (SRI) or Exclusionary Investing – The modern version of the term SRI has its roots in the 1960s and aims to avoid what some consider to be socially “bad” companies (think tobacco companies or casinos).
number three Environmental, Social, and Governance (ESG) – ESG criteria are a way to evaluate how a company behaves. For example, environmental standards can measure how a company treats natural resources; social standards can evaluate how a company manages relationships with its community; and governance criteria can focus on issues such as recruiting women and minorities for the board.
number four ESG in Action – The emphasis placed on ESG criteria varies across funds. Some funds may view ESG factors as one consideration among many as they make their investment decisions. Other funds may demonstrate a higher level of commitment to ESG investing by making it a key consideration in their investment decisions.
number five Impact Investing – This strategy generally involves seeking to generate positive, measurable, reportable social and/or environmental impact alongside a financial return. For example, an “impact” fund may invest in companies that strive to make the world a better place, such as renewable power-generation company, a water-treatment facility, or a company that seeks to eradicate a disease.
number six Performance Matters – Sustainable funds ”comfortably outperformed their peers” in 2020.1 Further diminishing lingering assumptions that sustainable investment strategies will underperform, 35% of sustainable funds finished in the top quartile of their Morningstar Categories and 66% in the top half.1
number seven Not Just for Millennials – Contrary to popular opinion, many investors across all ages feel positively about a sustainable portfolio: 44% of people age 71+ as well as 60% of people age 18-37 rated it favorably.2
number eight Explosive Growth – Sustainable investing is growing in popularity. During the last decade, it’s become a mainstream strategy as opposed to an aspirational concept. In fact, $17.1 trillion was invested in sustainable-investing strategies in the US at the beginning of 2020, up 42% from just two years prior.3
number nine Something to Talk About – A recent study found the top three issues for asset managers and their institutional clients are climate change/carbon, sustainable natural resources/agriculture, and board governance.3 Your list may be quite different. Talk to your financial professional about the causes you support or issues that concern you.
number ten Changing Perceptions – Despite some lingering reservations about sustainable investing, 57% of people say they would feel optimistic about incorporating sustainable funds into their portfolio. Many of those who felt positively attribute this to the positive environmental impact pursued by some sustainable-investing strategies.2

People Feel Good About Moving to a Sustainable Portfolio

Feelings about moving to a sustainable portfolio, while maintaining the same level of risk and diversification

Source: Schroders, “Beyond Profit: Sustainable Investing,” 2021. See footnote 2 for survey methodology.

 

1 Source: Morningstar, “Sustainable Funds US Landscape Report,” 2/19/20. According to Morningstar, in order for a fund to be included in the sustainable funds universe, ESG concerns must be central to its investment process and the fund’s intent should be apparent from a simple reading of its prospectus.

2 Source: Schroders, “Beyond Profit: Sustainable Investing,” 2021. Based on research collected from 23,000 people who invest globally. In the study, Schroders defines “people” as those who will invest at least €10,000 (or the equivalent) within the next 12 months and those who have changed their investments within the last 10 years.

3 Source: US SIF, “The US SIF Foundation’s Biennial “Trends Report” Finds That Sustainable Investing Assets Reach $17.1 Trillion,” 11/16/20. The Trends report counts two main strategies as sustainable investing: ESG incorporation—applying various ESG criteria in investment analysis and portfolio selection—and filing shareholder resolutions on ESG issues.

Important Risks: Investing involves risk, including the possible loss of principal. • Integration of environmental, social, and/or governance (ESG) factors into the investment process may not work as intended. • Focusing on investments that involve sustainable initiatives may result in foregoing certain investments and underperformance comparative to investments that do not have a similar focus.

CCWP060 225957

 

This material was prepared by Hartford Funds. Hartford Funds is not affiliated with Bailey Wealth Services or LPL Financial.

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Training

Holly Studied Business and Management at Sno-Isle Business and Management & Everett Community College. She has over 20 years of customer service and administrative experience.

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Education and Biography

TRAINING

Albert attended Honolulu Community College where he obtained his AA in Liberal Arts.

SPECIALISMS

Albert joined Bailey Wealth Services in 2022. His focus is to provide support to both prospective and existing customers with exceptional customer service. He is very personable and brings professionalism to his role.

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Education and Biography

TRAINING
Wes attended Liberty University where he obtained his BA in Philosophy.

SPECIALISMS
Wes joined Bailey Wealth Services in 2021. His focus is helping families maintain and grow the wealth they already have. Wes enjoys working with our valued clients to facilitate financial relationships by providing solutions, solving problems, and helping them manage their financial lives.

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My mission is to assist families as they strive to acquire, accumulate and retain wealth in a tax efficient manner so they may live in retirement with confidence and dignity. When I’m not engaged in professional activities, you can find me on a mountain top with my wife, Kim, and our two children, Eleanor and Oscar.

Education and Biography

TRAINING
Sean received his Bachelor’s Degree in Business Administration, Finance Concentration, from the University of Washington.

SPECIALISMS
Sean Bailey has been in the financial services industry for 30 years. He specializes in developing comprehensive financial, estate and retirement planning strategies for clients nearing and in retirement. Sean is a Registered Principal and Investment Advisor with LPL Financial. He is a CERTIFIED FINANCIAL PLANNER™ Practitioner. Sean is also a member of the Financial Planning Association and Ed Slott’s Elite IRA Advisor Group.

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I endeavor to provide excellent service to our clients and organizing processes and procedures to ensure our office runs smoothly. When not working, I enjoy spending time with my fiancé, Erik, and our two boys, Lukas and Archer along with our dog Pixie. I love cooking for them and experimenting with different recipes and techniques, including treats for Pixie. Our favorite family activity is taking road trips, especially to California to visit family and friends.

Education and Biography

TRAINING

 

Sonya received her BA in Art at California State University, Chico and has over 25 years of administrative and customer service experience in the financial services and accounting industries.

 

SPECIALISMS

 

Sonya’s focus is to help clients reach their financial goals by assisting them with their various transactions and paperwork to service and maintain their accounts. This includes opening new accounts and initiating transfers from and to financial institutions. Sonya is constantly looking for new ways to improve our processes to ensure we work efficiently and in a manner that creatives positive experiences for our clients.

Sonya Jones

I endeavor to provide excellent service to our clients and organizing processes and procedures to ensure our office runs smoothly. When not working, I enjoy spending time with my fiancé, Erik, and our two boys, Lukas and Archer along with our dog Pixie. I love cooking for them and experimenting with different recipes and techniques, including treats for Pixie. Our favorite family activity is taking road trips, especially to California to visit family and friends.

Education and Biography

TRAINING
Sonya received her BA in Art at California State University, Chico and has over 25 years of administrative and customer service experience in the financial services and accounting industries.

SPECIALISMS
Sonya’s focus is to help clients reach their financial goals by assisting them with their various transactions and paperwork to service and maintain their accounts. This includes opening new accounts and initiating transfers from and to financial institutions. Sonya is constantly looking for new ways to improve our processes to ensure we work efficiently and in a manner that creatives positive experiences for our clients.