Sustainable Investing: How your portfolio can make a difference

In an age of climate change, global turmoil, and social inequity, investors are asking themselves how they can invest in a way that will bring growth and stability to their portfolios but also do good for the planet and its inhabitants. Chartered SRI Counselor Alex Papadopoulos prides himself on working towards sustainability with sustainable investments at his firm Egéa SRI. He emphasizes that sustainable investing is not just a passion of his but a responsibility we all share. As investors, we can have a say in investing our assets, empowering us to make a difference. 

What exactly does it mean to engage in sustainable and responsible investing, also known as SRI? SRI is defined as an investment strategy that seeks a strong financial return but can also serve an important idea, belief, or cause for the investor. ESG analysis is the underlying factor in all SRI strategies. Environmental, social, and governance (ESG) risks and opportunities are the criteria for which a set of standards is created to allow socially conscious and sustainable investors to screen investments. 

Papadopoulos elaborates, "As consumers and investors, we can seek out profitable and sustainable oriented companies.  The data shows that we can grow our investments while protecting the environment, celebrating our diversity, and looking out for all the communities we do business in; sustainability is key to a thriving future for all of us. 

PWC’s Asset and Wealth Management Revolution report showed that 30% of investors claim they have difficulty finding suitable and appealing ESG investing possibilities. There are approximately 330,000 financial advisors in the US. Of those 330,000, less than 3,000 financial advisors (0.009%) hold the Chartered Sustainable, Responsible, & Impact Counselor (CSRI) designation. This designation is the benchmark for financial advisors in the sustainable investing field. Alex has 25 years of experience as a financial advisor and has been creating sustainable portfolios for clients since 1999.   

"Our firm is at the center of sustainable investing. We have the financial planning tools that clients need for retirement and financial planning, along with the necessary investment screens to tailor ESG portfolios. It's our role to help investors decipher all of the information out there [on SRI] because it can be overwhelming at times. The clients we talk to are looking for direction, advice, and how to get started." 

Despite SRI's significant credibility and soaring popularity, there is still the misconception that making the world a better place must come at the cost of the profitability of your investments. Papadopoulos says he's met with some investors who believe SRI to be a "zero-sum game" in which financial benefits are sacrificed to do the right thing. In Papadopoulos's own words, "That is absolutely not true according to the data." 

Research conducted on the performance of nearly 11,000 mutual funds from 2004 to 2018 shows that there is no financial trade-off in the returns of sustainable funds compared to traditional funds, and they demonstrate lower downside risk (Morgan Stanley Sustainable Reality). 

Papadopoulos concludes, “Sustainable investing can be profitable while at the same time creating positive change for humanity and the environment. ESG portfolios can be used in retirement accounts, regular investment accounts, trusts, 401k's, and Endowments. Together we can make a difference." 

Disclosure: 

Securities and Investment advisory services are offered through Osaic Wealth, Inc. member FINRA /SIPC. Osaic Wealth is separately owned and other entities and/or marketing names, products, or services referenced here are independent of Osaic Wealth.