As consumers continue to raise expectations of being social responsibility for our planet, they have also become very aware of companies that are socially aware and taking responsibility for their environmental impact. Early on, companies taking an active role in being environmentally conscientious tended to be small with products or services that were difficult to scale, making them questionable investments. That is no longer the case.
Small, medium and large companies are working to reduce their environmental impact, engage in philanthropy and become socially responsible to employees, as well as the greater community.
Socially responsible investing, green investing, social investment, sustainable funds, socially conscious . . . these terms all describe investments that consider the financial return, as well as the social/environmental impact of the company or organization.
As businesses have taken notice of their environmental footprints, identified how they can best respond to social issues and have actively engaged in having a socially responsible impact, financial managers responded and have created funds for investors who want to support companies who have committed to these principles.
In January 2018, Corporate Knights, a Canada-based financial information company, published a report on the World’s Most Sustainable Companies (companies with a minimum annual revenue of $1 billion). From communications and technology to consumer products, organizations are working towards promoting the safety and well-being of their workforce and actively focused on reducing greenhouse gas emissions, resource use, waste and more.
For investors strictly interested in profit, there is often concern that the cost of ‘going green’ is just beginning to create sustainability programs and goals. In a recent study, Kellogg researchers argue against this concern, saying that sustainability practices can improve a company’s share price. “Green companies may not be raking in the cash now, but they are more likely to outlast sudden industry shake-ups, such as new pollution regulations or consumer-driven demand for eco-friendly products,” according to the report. Companies with sustainability policies could offer better investment return in the long term.
Financial Plans are developed with a long-term strategy in mind. Investment funds focused on socially responsible stocks are no longer considered out of boundaries and can be considered as viable options.
If you are interested in learning more about making sustainable investments, our team at LifeSteps Financial can provide insight and perspective into how these may fit into your investment strategy.
References:
Kellogg Insights article: https://insight.kellogg.northwestern.edu/article/the-case-for-investing-in-green-companies
Corporate Knights 2018 World’s Most Sustainable Companies Report: http://www.corporateknights.com/reports/2018-global-100/
Forbes article on Most Sustainable Companies, 2018: https://www.forbes.com/sites/karstenstrauss/2018/01/23/the-worlds-most-sustainable-companies-2018/#364b0a8232b0
