3 Ways to Invest in Our Planet on Earth Day

3 Ways to Invest in Our Planet on Earth Day

April 22, 2022

Earth Day could be a good time to consider how your own investment strategies may impact how you and next generations experience life on Earth.

 

Financial investing is vital for many who wish to grow, protect, access, and transfer wealth. If you are an investor looking for ways to celebrate Earth Day this month, is now a good time to consider whether and how your own financial investments align with your own values?

1. Values Based Investing

Are you looking for investment strategies aligned with your goals and values? Different things matter to each of us. Values-based investing encompasses a broad range of approaches to investment strategies, lifetime gifting, and estate planning.

Some investors want to focus on particular social goals (for example, empowerment of women and girls); others may want to focus on environmental priorities (for example, human contributions to climate change). Others may want to pursue strategies that incentivize business organizations to make important changes in how they touch the planet and its people.

Know the difference between SRI, ESG, and Sustainability investing strategies.

2. SRI and ESG Investing

Socially responsible investing (“SRI”) applies “negative screens” to exclude securities of issuers because of the products they make. Environmental & Social Governance (“ESG”) investing seeks to “screen in” companies that outperform their peers in environmental and social performance. 2

3. Sustainability Investing

In contrast to SRI strategies that screen out companies who make unloved products and ESG strategies that “screen in” based on environmental and social performance but not necessarily financial results, “Sustainability” investing seeks to ‘screen in’ companies that excel across all three spheres of the triple bottom line: financial, environmental, and social performance – in each of every business sector. Companies that deliver superior organizational performance across the full scope of environmental, social, and financial dimensions might also be likely to deliver superior shareholder returns over time.[1]

When a business is truly sustainable, it works to mitigate negative environmental and social impacts and also helps create positive ones when possible. Consider helping to support these companies by investing in them or giving them your business, to help them achieve their goals and set best-practice examples for other businesses while you build your investment portfolio.3

Footnotes:

1Earth Day 2022: Invest in Our Planet, earthday.org, https://www.earthday.org/earth-day-2022/

2How to Plant Roots in the Green Economy on Earth Day, Stash.com, https://www.stash.com/learn/earth-day-is-here/#:~:text=As%20you%20celebrate%20Earth%20Day,offers%20under%20%E2%80%9CMIssions%20and%20Causes.

3The World Commission on Environment and Development (Brundtland Commission) in 1987 defined “sustainable development” as development “that meets the needs of the present generation without compromising the ability of future generations to meet their own needs.” Sustainability | United Nations. See generally Sustainable1 Solutions: Indices | S&P Global (spglobal.com); ESG (macnaughtonandassociates.com)

Sources

https://www.earthday.org/earth-day-2022/

https://www.stash.com/learn/earth-day-is-here/#:~:text=As%20you%20celebrate%20Earth%20Day,offers%20under%20%E2%80%9CMIssions%20and%20Causes.

 

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal.

Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.

All information is believed to be from reliable sources; however LPL Financial and MacNaughton & Associates LLC make no representation as to its completeness or accuracy.

This article was prepared by WriterAccess and Ann L. MacNaughton, former Council Member, American Bar Association Section on Natural Resources, Energy, and Environment; Senior Editor, Environmental Dispute Resolution: An Anthology of Practical Solutions (ABA 2002, putting for the first time that topic into a sustainability framework); Am. Bar Association Delegate, 2002 World Summit on Sustainable Development (2002 Johannesburg, S. Africa); Keynote “Financial Issues in Sustainable Development, EnviroLaw Conference (2002 Durban, South Africa).