Lately we’re all bearing witness to an array of irresponsible behavior—it seems to be the tone and tenor of today. We’re taught to wipe our feet, hold the door, and say “thank you” when served. But what about the big stuff? Who is there to guide us as we move from crawling, to walking, to running our own thing?
One area of my life I thought would be difficult to manage was investing. Investing money is never easy, as there are a host of rational and emotional issues attached to assuming risk. More so, I thought investing was ‘dark’ and could not be easily done in an ethical manner. It just seemed putting my money in the hands of companies, or people, who wouldn’t adhere to my standards was a nerve-racking endeavor―as news on investing was often fraught with people operating unethically, or even illegally. Yet I wanted to invest well, and at the same time find a good rate of return for my risk. I was perplexed.
Then I came upon the concept of ESG investing. ESG stands for environmental, social, and governance―three main elements to consider when measuring the ethical impact and overall sustainability of investing in a company. Environmental measures assess the company’s impact on nature as well as other animals; social aspects take into account a company’s business practices with others including vendors, its own employees, as well as the overall community in which it operates; and governance, or how a company operates and runs the day-to-day accounting practices and its management style. Basically, they are yardsticks with which to measure corporate behavior with the rationale that a company that behaves well on ESG measures, over time, also performs well financially.
How W5 conducts its business has always been paramount to each and every employee at our firm. How we operate is why we operate. It only made sense to extend this principle to the money I saved for my family’s future―ESG investing fits the bill.
I’ve found it easiest to ESG invest through mutual funds, Index funds, and ETFs. That way the chore of determining ESG suitability of a stock or the like is left in the hands of a team of experienced investment professionals. At the close of 2017 there are now a dizzying array of ESG options. The goal is to find the right set of people to handle the task at hand. Personally, I recommend looking beyond the fund itself and see how well the investing company itself does at adhering to ESG standards.
Any company can develop and market an investment instrument that fits the profile of ESG investing, yet I’ve found the most successful funds are those resulting from an investment firm’s ethos―the reason it exists. One such company is Parnassus Investments based in San Francisco. Not only does Parnassus have a series of successful ESG-related funds, it is founded and managed on such principles. There are other such firms, and I’ve found it’s a matter of matching personal style with investment style. Such an approach has been a winning combination for me, making it possible to successfully invest in today’s complex world and still sleep at night.