How Cambrian Wealth Advisors can Help with Sustainable Investing

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Nowadays, it is important to many people that the companies they invest in provide sustainable, long-term returns through ESG practices. ESG is the term that has emerged globally to describe the Environmental, Social and Corporate Governance factors that concern investors and other stakeholders. 


What is Sustainable Investing?

Sustainable Investing, also known as Responsible Investing, is the type of investing that incorporates environmental, social and governance factors (ESG) into investment decisions. Investors have this option available to them, allowing them to invest in companies that are aligned with their personal values.

When constructing a portfolio with Sustainable Investing consideration, portfolio managers will examine a company to ensure they have policies and practices in place related to the Environmental, Social and Governance factors relevant to their industry.

“From an investor perspective, Sustainable Investing gives peace of mind that there’s another layer of due diligence in the screening process by looking beneath the hood of just the company’s financial statements,” says David MacRae, Wealth and Advisory Services director at Cambrian Credit Union.

Sustainable Investing seeks to better manage risk (including value-destroying reputational risks stemming from issues such as climate change, pollution, working conditions, employee diversity, and corruption) and generate sustainable, long-term returns.  When investors are focused on an investment that matches their personal values, they are more inclined to ride out market volatility, meaning responsible investments are less likely to experience the levels of turnover seen in more traditional mutual funds.

What are ESG factors?

Environmental

In this factor, the investor considers a company’s environmental impacts before deciding to invest. Examples of environmental impacts can include its carbon footprint, water use and clean technology.

Social

This factor refers to a company’s social impact within the broader community. Issues such as diversity and inclusion, community engagement, and other social issues come into play. Analysts look closely at a company’s stance on these issues (among many others) before an investor adds a company to their portfolio.

Governance

The governance factor simply considers how an organization is governed or managed. The investor looks at the board of directors, overall transparency, shareholder rights, equity and diversity and even executive compensation.

 

Advantages of Sustainable Investing?

Make a difference and a profit

Investors no longer have to choose between making a positive impact in their communities and making a profit. Sustainable Investing allows both to coexist. We have the option to invest in companies that align with our personal values and can choose to avoid companies we don’t believe in.

For example, an investor who is environmentally conscious can choose to invest in any company that’s not involved with oil and gas or companies that use only clean technology.

Reward ethical companies

Sustainable Investing puts dollars back into more ethical companies, which enables them to continue to do business while driving positive change.

On the other hand, when more investors choose sustainable investing, they forego other companies they consider unethical, which causes such companies to be deprived of capital. In the long run, these companies will embrace sustainable principles and create an even bigger impact on the planet.

Reduce risk on your portfolio

To keep up with being ethical, many companies are now embracing sustainable practices and leaning more toward ESG investments.

Because of this, adopting Sustainable Investing might help you reduce the risk of losing money in the future by diversifying your portfolio over a variety of companies.

 

How can Cambrian help?

At Cambrian, we know that all our members have different needs, and we are prepared to work with each member for a tailored solution. Our wealth advisors are experienced and fully trained to support members who are looking to invest.

All Credential Asset Management advisors at Cambrian Credit Union are completing their Responsible Investment Specialization Designation in 2019, allowing them to guide you as you build your responsible investing portfolio.

Our advisors are available to answer any questions and offer guidance. Set an appointment today to get started.