Ethical Investing 101: Proven Strategies for Long-Term Growth

Ethical Investing Strategies for Sustainable & Profitable Growth

Investing in sustainability is no longer considered a niche anymore. It's the right way to simultaneously increase your wealth and influence the world in a positive direction. At Avraham Bental, we want to practice what you preach, and we will help you with that. 

Ethical investing, which is also known as sustainable or socially responsible investing, is the act of choosing companies that bring in financial gains and, at the same time, do so under the consideration of the environment, society, and corporate governance (ESG) factors.  It involves investing in companies which have a stronger sustainable ethic, creating a fairer market that is also moral in nature.

Sustainability is one of the important problems in our society. Planetary stewardship and sustainable investing strategies or ways of living are a few of them. This guide has got the job of letting you master the ins and outs of sustainable investing strategies and the ways they can be good for a long time.

Ethical investing: Why choose this way of investment?

At the heart of it is your being: Work on causes that you are concerned about.

High growth potential into the future: Indeed, companies with suitable ESG records are usually better than their counterparts.

Management of business risks: The construction of ethical guidelines affects the durability of companies in the face of both legal and image setbacks.

Key Sustainable Investing Strategies

1. ESG Integration

ESG integration needs the data to be analyzed in the light of the potential long-term economic growth of a company for investors to be able to get an idea of the company's sustainability and finance. This type of shift will know the companies with the best performance.

Example: MSCI conducted a study that showed companies with high ESG ratings were more successful and had less volatility when compared to the rest of the market.

      2. Impact Investing

The effective sustainable investing strategies include it. Impact investing as a notion is a thing in the line, which not only yields profits but also creates both social and environmental changes which one may count on. This approach often turns to the fields of renewable energy, affordable housing, and healthcare.

Case Study: 2020 was the best year in recorded history of impact investing. The Global Impact Investing Network (GIIN) surveyed 88% of impact investors that they all met or exceeded their financial expectations in the year 2020.

      3. Negative Screening

Negative screening is a method that prevents companies and industries that are against your morals from being included. For instance, if you decide not to invest in industries like tobacco, fossil fuels, or weapons.

Example:

It was in the year 2020 when the Norwegian Government Pension Fund withdrew the support of 53 companies accused of unethical activities and gave inaccurate data about the number of corporations that got excluded just to inform the public on the significance of sustainable investments.

     4. Positive Screening

Positive screening is the method where leading companies in sustainable development are chosen. In such a case, companies of renewable energy, education, and healthcare are the most prioritized ones.

Data Point: Morningstar reveals data showing that a record of $51.1 billion in sustainable funds were reached in 2020, which points at the growing interest of investors in such funds.

     5. Shareholder Advocacy

Shareholding advocacy is about the shareholders' behavior change to the company. For instance, one may vote for the shareholders' agreement or have a one-on-one talk with the company's management.

Example: In 2021, a number of investors made it to Amazon and pushed the company to embrace an even more challenging climate change plan, in a bid to discourage the use of fossil fuel and drive positive change.

𝐁𝐞𝐧𝐞𝐟𝐢𝐭𝐬 𝐨𝐟 𝐒𝐮𝐬𝐭𝐚𝐢𝐧𝐚𝐛𝐥𝐞 𝐈𝐧𝐯𝐞𝐬𝐭𝐢𝐧𝐠 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐞𝐬

Greater returns: Firms with good ESG practices usually surpass others.

Decreased risk: Morally upright companies seldom bring about any scandals or get regulatory fines.

Beneficial outcome: Your actions (as an investor) will play a part in bringing about changes to a more sustainable world.

𝐇𝐨𝐰 𝐭𝐨 𝐆𝐞𝐭 𝐒𝐭𝐚𝐫𝐭𝐞𝐝 𝐰𝐢𝐭𝐡 𝐄𝐭𝐡𝐢𝐜𝐚𝐥 𝐈𝐧𝐯𝐞𝐬𝐭𝐢𝐧𝐠

Stage 1: Procure a List of Values 

Find your passion or purpose such as clamping down on waste and soothing social issues or the quality of corporate control.

Step 2: Discover Potential Investments 

Search for funds or companies that have the same values as you do. Start your search with rating tools such as ESG or finding reports on sustainability.

Step 3: Conversation with Investment Advisor

Case Study 2: Patagonia

Protecting the environment is Patagonia's main commitment which is the reason for its large consumer base as well as the attraction of ethical investors. The company made 30% more revenue in 2020 as it successfully combined business with proper conduct.

𝐂𝐨𝐦𝐦𝐨𝐧 𝐌𝐲𝐭𝐡𝐬 𝐀𝐛𝐨𝐮𝐭 𝐄𝐭𝐡𝐢𝐜𝐚𝐥 𝐈𝐧𝐯𝐞𝐬𝐭𝐢𝐧𝐠

Myth 1: Ethical Investing Means Sacrificing Returns

Fact: Studies have presented that eco-friendly companies usually do well and a lot of the times mix match traditional companies in relation to money they bring in. In other words, both of the options are profitable.

Myth 2: Ethical Investing is Only for the Wealthy

Fact: The arrival of ESG-themed ETFs and mutual funds have made it possible for average people to integrate ethical investing into their financial world.

Myth 3: Ethical Investing is Just a Trend

Fact: Aside from the profitability of eco-investments, the global sustainable investment market as of 2020 equaled the amount of $35.3 trillion.

𝐓𝐨𝐨𝐥𝐬 𝐚𝐧𝐝 𝐑𝐞𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐟𝐨𝐫 𝐄𝐭𝐡𝐢𝐜𝐚𝐥 𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬

ESG Ratings: Websites like MSCI and Sustainalytics are platforms that provide ESG scores for companies.

Sustainable Funds: Try to spot a fund that pays particular attention to ESGs such as Vanguard ESG US Stock ETF.

𝐖𝐡𝐲 𝐂𝐡𝐨𝐨𝐬𝐞 𝐀𝐯𝐫𝐚𝐡𝐚𝐦 𝐁𝐞𝐧𝐭𝐚𝐥 𝐟𝐨𝐫 𝐄𝐭𝐡𝐢𝐜𝐚𝐥 𝐈𝐧𝐯𝐞𝐬𝐭𝐢𝐧𝐠?

Our first job at Avraham Bental is assisting our clients in building their investment portfolios that reflect their personal values. Our team of experienced investment consultants is going to guide you by helping you to define your goals to identify the right investments.

𝐎𝐮𝐫 𝐀𝐩𝐩𝐫𝐨𝐚𝐜𝐡

Custom Strategies: These strategies have to be specific to your own values and goals in finance.

Expert Counsel: We have expertise in sustainable investing strategies, and we offer it to customers.

Clear Communication: Regular updates and new insights are still in store that will keep you notified.

𝐅𝐢𝐧𝐚𝐥 𝐓𝐡𝐨𝐮𝐠𝐡𝐭𝐬

It is no longer just a trend to place your trust in ethical investments. The strategy for long-term growth is the practice of sustainable investment, which is also sustainable. It is this investment approach you will adopt so that the world becomes better while you make your financial aspirations a reality. 

Investing in sustainability is no longer considered a niche anymore. It's the right way to simultaneously increase your wealth and influence the world in a positive direction. 

At Avraham Bental, we want to practice what you preach, and we will help you with that. Sustainability is one of the important problems in our society. Planetary stewardship and sustainable ways of living are a few of them. 

This guide has got the job of letting you master the ins and outs of sustainable investing strategies and the ways they can be good for a long time.