Investing in Humanity Sep01

Investing in Humanity...

Curious about sustainable investments? You’re not alone. Sustainable investments result in better operational performance, improved stock prices, and proven psychological benefits. So why aren’t more advisors talking about it? JP Morgan defines sustainable investments as “investment approaches that enable investors to integrate environmental, social and governance (ESG) considerations into their investment strategies and create positive benefits for society.” In 2014, an estimated $21.4 trillion of global assets were reported as sustainable investments. That is an $8 trillion increase from 2012. This field of investment continues to grow due to favorable results: The University of Oxford and Arabesque Partners reports that 88% of companies that practiced effective ESG management were also able to improve operational performance. Stock prices performance improved for 80 percent of companies that prioritized ESG issues. JP Morgan and the University of Oxford have not analyzed the warm and fuzzy sensation that can come as a result of investments with a higher purpose. But others have. New York Times compiled several studies that examine the connection between acting for the greater good and emotions. Sources conclude that supporting causes that we feel good about reduces stress levels and can even extend lifespans. When we feel positively about a cause that we support, we are more likely to support that cause wholeheartedly and consistently.  Do-gooding simply makes us feel better about ourselves and the prospects of the world that we live in. Meir Statman’s What Investors Really Want explains that investors value an emotional connection with the company or organization in which they are investing. Such strong emotions can “drive prices and performance above the funds and fundamentals involved,” reports JP Morgan. With financial and personal benefits to gain, why aren’t more asset managers broaching the topic with clients? Only 63 percent of...