As thought partners to our families, one of our principle goals is to help them gain a fuller understanding of the investments they make. We believe a key component to making decisions that are most suitable and consistent with each family’s objectives and aspirations is answering the questions “What do we own?” and “Why do we own it?” One growing area of focus has been a desire to understand how our investments address and impact Environmental, Social and Governance (ESG) issues. This perspective of socially conscious screening has evolved over the past several decades from “Ethical Investing” to “Socially Responsible Investing” to what is now broadly referred to as “Responsible Investing.” Simply put, this perspective reflects the desire for investors to know not only what the assets in which they invest do, but how they do it.
There is no doubt that the principles of Responsible Investing are firmly rooted, yet we anticipate that the manner in which it manifests itself will continue to evolve. One analogy that comes to mind to illustrate this dynamic is the trend of healthy living. The ever-growing desire to lead a healthier and longer life appears to have staying power in society. However, many different diets and exercise programs have come and gone over the years as we continue to search for a program that is both effective and well-suited to our own personal preferences and lifestyles. The concept of Responsible Investing isn’t so different. There are, and have been, a variety of solutions, but if or how we use any of them should be a product of our own points of view and part of a broader personalized strategy.
To that end, we wanted to share the attached piece put together by our research partner, Asset Consulting Group. The piece provides a brief summary of the evolution of Responsible Investing and ACG’s take on the current environment. One point we found particularly interesting when researching this topic is that many investment managers that our families invest with are not branded as “Responsible Investments,” yet they meet many of the same standards as those who do brand themselves this way. An evaluation of their underlying holdings and exposures showed that they had the same (or even better) RI “scores” as managers that explicitly branded themselves as Responsible Investing funds.
If you take a step back from labels, it stands to reason that well-governed companies will have management teams that are acutely aware of consumer demands, shareholder perspectives, the environment, and the sustainability of their business model. In other words, the distinction between Responsible Investing and simply smart investing is subjectively defined, and still worthy of exploration and rigor. Ultimately, we are encouraged by the overall growth in transparency of investments and believe there will continue to be improving opportunities for families who want to view their portfolios through a Responsible Investing lens.