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Socially Responsible (ESG) Investing
Our team runs diversified environmental, social and governance (ESG) models for investors interested in pursuing goals beyond financial growth when building their portfolios. Whether implemented through socially responsible investing (SRI) screening, ESG integration or impact investing, sustainable investing can allow investors to make a positive impact on society and the environment and potentially improve the risk/return characteristics of their portfolios by factoring (ESG) criteria into their investment decisions.
Investors may consider sustainable investing for a host of reasons:
- Risk mitigation: Companies that ignore their social and environmental impacts may face regulatory and governance
- More conscious approach to investing: Investors may aim for a positive impact or avoid ties to questionable
- Long-term performance: Companies with a negative reputation or poor business practices may not be sustainable.
- Align investing with personal or religious views: Investors may not feel comfortable investing in companies whose business practices they view as morally
SUSTAINABILITY – KEY TERMS
ESG integration: Combining environmental, social and governance criteria with traditional financial considerations. It is sometimes implemented as a strategic approach by identifying and investing in companies that are the highest ESG performers within a sector or industry group.
Exclusionary screening: Excluding certain sectors or companies if they conflict with an investor’s values. Also known as negative screening or socially responsible investing.
Impact investing: Investing with the intention of generating social or environmental impact alongside a financial return. The exact impact can vary based on the investor’s goals.
Sustainable investing: An umbrella term that includes all of the strategies described above.
All investments are subject to risk, including loss. Socially Responsible Investing (SRI) considers qualitative environmental, social and corporate governance criteria, which may be subjective in nature. There are additional risks associated with SRI, including limited diversification and the potential for increased volatility. There is no guarantee that SRI products or strategies will produce returns similar to traditional investments. Because SRI criteria exclude certain securities/products for non-financial reasons, investors may forego some market opportunities available to those who do not use these criteria.
Raymond James does not provide tax advice. Please discuss these matters with your tax professional.