7 Myths of Sustainable Investing
Posted on January 16, 2016
As a lead up to our upcoming Sustainable Investing presentation coming up on January 28th, we're also looking to bust some of those myths about investing your money in assets that take into account a triple bottom line - people, planet, & profit.
Myth one: my money won’t make a difference
Actually, thanks to our collective investment (alongside government support) in renewable power and fuels, cleaner energy technologies and projects are increasing (by as much as 17% in 2012) and spreading to more countries. Our money is already making a difference and the greater our investment, the greater the impact!
Myth two: the returns are lower than traditional investments
Recent data shows SRI fund returns are comparable (and sometimes even outperforming) traditional funds. Because SRI funds invest in companies that are tackling social and environmental issues directly and finding cost savings that positively affect their bottomline, this proactive approach to innovation and efficiency is reflected in share prices.
Myth three: the SRI market isn't mature
The SRI sector is no longer a fledgling industry. With consumers becoming far more educated and attracted to supporting the environment, the size of funds under management has increased significantly. Equally, the range of fund styles have developed dramatically with more options available for a variety of investment options.
Myth four: I can’t see where I’m investing, therefore I don’t feel engaged
While this fear is natural given what we learned about the underlying causes behind the financial meltdown in 2008, it's important to remember that fundamental to the issue then was a complete lack of transparency where the vast majority of market assets had no underlying value. In contrast, SRI funds depend on transparency for their success. The origins of SRI funds derive from an investor’s need to recognise that they are making a positive contribution.
Myth five: I have no trust in how my investments are managed
Trust and transparency are integral to the SRI industry. As a result, fund managers need to communicate with their investors in order to foster trust and confidence. Given this scrutiney, SRI fund managers carry out more in-depth research; analyzing environmental, social, and governance factors. Current evidence shows that when combined with financial analysis, this approach to fund management is more likely to achieve long term sustained performance.
Myth six: I can’t spread investment risk investing this way
SRI filtered funds now can include a number of different asset classes, including shares, corporate bonds and property. These different styles mean that, as a SRI investor, you can invest in larger, more established, sustainable companies, as well as emerging companies who are making a more direct contribution to a more sustainable future.
Myth seven: I want to leave a positive legacy with my investments but feel helpless on my own
You don’t have to feel you are on your own; on the contrary, you can become part of a movement for positive change where we've moved SRI from the margins to the mainstream. The evidence suggests that SRI has now gone through the early development stages and a recognised movement has now been formed.
Some of this content is republished from Richard Essex's article on Breaking the Eight Myths of Sustainable & Responsible Investment. Richard is an independent financial adviser with Grayside Financial Services, where he is a specialist for green and SRI advice. He is also the author of the 2014 book, Invest, Feel Good and Make a Difference.