Making Money the Right Way
As the next generation of investors move in, money in dirty stocks moves out. Over a third of market players are interested in socially responsible investing (SRI), including 87% of millennials.
SRI is now a thing then, but are these market greenies making any money? Yes, they are. Yesterday, the International Monetary Fund (IMF) published a report showing “sustainable” investors’ stock market returns just as topsy-turvy as everyone else’s.
So, as the world breaks itself before our very eyes, demand for ethically-conscious investment portfolios is sky-rocketing. To appease investor demand, many firms initially started generously scoring themselves for social responsibility. That artificially “greenwashed” the market, so a few independent third parties stepped in. Now, environmental, social, and governance-based factors are wrapped up in an ESG score for investors.
Using these rankings as a proxy, Wall Street has assembled over 1,500 done-for-you, ready-made baskets of stocks that promise only to track the most squeaky clean and green companies! The top 1% of these exchange traded funds (ETFs) include large companies and small, in developed markets and emerging markets. You can even shop for your cause. SHE is for gender equality, CRBN rewards carbon targets, DSI focuses on social factors, and SPYX is all about going fossil fuel free. This new world of thematic funds won’t cost you an arm and a leg, either. Expense ratios (yearly fees) aren’t as overblown as they used to be.
So, there you have it! Ethically-challenged companies that fly by night and prioritize profit “at all costs” are facing their day of reckoning. Over 20-trillion-dollars is forecast by Charles Schwab to be invested sustainably in the coming years. How much of that money will be yours?