What is Sustainable Investing?

Today’s investors have more options than ever in who they work with and how they invest. Because of the worldwide connections, investors can find advisors who truly understand their priorities and connect on a personal level. One of the greatest advantages modern investors have is the option to choose a sustainable investment strategy.

Sustainable investing is an investment strategy where an investment’s long-term social, environmental, and economic impacts are weighed in along with profit potential. This strategy aligns sustainability with financial gains to ensure family values are not crossed in order to make a profit. At Sovereign Financial we personalize this process to create a values-based investment strategy that takes personal passions and beliefs into account when creating a portfolio for one of our investors.

Sustainable Investing is Becoming Increasingly Popular. What is Driving This?

The US SIF Foundation’s 2020 Report on US Sustainable and Impact Investing Trends found that one out of every three dollars invested in 2019 was managed according to sustainable investing strategies. This indicates to many investment firms that sustainable and values-based investing is just as important to modern investors as profits. But why?

Sustainable investing caught traction as early as the 1990s and has steadily increased since then. In the age of the internet and a global economy, people feel more connected to the world outside themselves and are able to choose investments that support their values. Sustainable investments allow financial goals to align with principles, personal values, and family beliefs. It also requires greater transparency, something every investor strives to find with the firms they trust.

Sustainable Investing is Becoming Increasingly Popular. What is Driving This?

Sovereign Financial’s values-based investing strategy incorporates sustainable investing principles in a more personalized way. First, we interview our investors to learn about their personal values, family beliefs, and hopes for the future. Then, we incorporate these hopes and values into their portfolios by finding profitable companies that share the same mission.

Values-based investing creates an impact for the investor and the community at large. Using this strategy, your profits can support clean energy, medical technology, or industries that you’ve served in the past. It can also ensure your money doesn’t go toward brands that support causes you don’t believe in.

Some of the options we look into for values-based investments include:

Renewable energy
Cybersecurity
Curing diseases
Fair labor practices
Global access to education
Environmental sustainability
Organic food supply
Family-friendly entertainment
Community resource development
We also offer the option for you to avoid specific industries or brands that may be controversial or out of line with your personal beliefs. Some of these include:

Alcohol
Abortion
Tobacco
Gambling
Anti-family entertainment
Pornography

Values-based investing requires greater transparency than traditional investing strategies where profit is the only concern. This is an advantage regardless of your goals as an investor. Even if values-based investing is not your top priority, you can trust firms like Sovereign Financial to be open and honest with you about options that are in your best interest.

Types of Sustainable Investing

Like traditional investing, sustainable investments can include public equity investments (stocks), cash, private equity, venture capital, and real estate. However, firms purposely choose opportunities that align with their interests and avoid conflicts between company and investor interests. There are three primary approaches to sustainable investment selection:

Avoid – Avoidance strategies seek to simply avoid investments that are controversial or conflict with the investor’s interests.
Embrace – Embracing strategies, in contrast, selects companies and opportunities that align with an investor’s passions and interests. They must both offer financial gain and be in industries that serve humankind, such as medical technology or clean energy.
Engage – Engagement strategies are designed to influence company development through investor activism. These involved strategies allow investors to shape corporate policy to encourage positive change within the community.

Does Sustainable Investing Lead to Lower Returns?

Many investors worry that their sustainable investment strategy will lead to lower returns, but this isn’t true. Values-based investment prioritizes financial return, aligning investments with personal values to achieve short-term gain. Values-based investing chooses opportunities with integrity and long-term sustainable profit potentia

Industries like clean energy, medical technology, and global education are projected to become top industries within the next few decades. They are, therefore, prime opportunities for investors who want to make a difference. Sovereign Financial offers in-depth analysis on opportunities within these sectors to ensure you can plan for your financial future while making positive changes in the world your children and grandchildren will inherit.

What should investors consider when creating a values-based investment portfolio?

Values-based investing allows you to fully customize your portfolio based on long-term financial, social, and environmental goals for you and your community. When talking with your Sovereign Financial advisor, ask them about opportunities that:

Align with your family’s values and personal beliefs
Help support causes most important to you
Align with other charities, missions, or foundations you support
Give you the opportunity to make a change through shareholder advocacy
Align with your long-term financial goals
Can help you achieve financial benchmarks such as saving for retirement, funding a college education, or creating a suitable inheritance for your family

Like any investment firm, Sovereign Financial prioritizes your financial health and wealth for the future. However, we want you to achieve these goals in a way that honors your beliefs and aligns with your family’s goals for the future. Contact Sovereign Financial today to learn how values-based investing can help you achieve both personal and financial goals sustainably.

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