In the post-pandemic investment environment, investors have become more interested in environmental, social, and governance principles.
According to a recent TD Ameritrade survey, almost one-third of Americans have considered socially-responsible investments, Business Insider reports.
“With the Millennial generation, we are a values-driven and purpose-driven generation, and being in alignment with companies or people that share similar values—that’s a non-negotiable for many of us,” Rich Jones, founder of the podcast “Paychecks & Balances,” told Business Insider.
This has been a growing trend among the investment community. Global sustainable index mutual funds and ETFs saw assets under management double over the past three years, to $250 billion, according to a Morningstar report.
In a year marked by a Covid-19 outbreak and social unrest, we have seen a spike in interest in issues like corporate governance, climate change, and racial justice.
“Since COVID, there are certain things that we feel have to be group solutions,” Steven M. Hughes, a financial educator, angel investor, and founder of the non-profit Know Money, told Business Insider.
The aging millennial generation that experienced the financial crisis has also contributed to this new push as many come of age and begin investing in what they believe in.
“With the 2008 crisis there was a bit of a shift in terms of thinking—that corporations should benefit the world and should benefit society,” Jones added.
Investing in the socially responsible theme is more than a feel-good investment strategy. The S&P 500 ESG Index has outperformed the S&P 500 this year, rising 15.21% year-to-date, compared with 13.49% for the large-cap benchmark. Cliff Feigenbaum, the founder and publisher of GreenMoney Journal, argued that this outperformance in ESG investing is more than a short-term blimp and is backed by good long-term financials.
“The truth is, these are bottom line issues,” Feigenbaum told Business Insider. “Waste costs money, pollution costs money, your reputation in the marketplace is vitally important in business today.”
For more news, information, and strategy, visit the ESG Channel.