Also known as, sustainable, socially conscious, or ethical investing. More investors are seeking investments that they feel can combine their desire to maximize financial return and social good. SRI considers investments in companies whose corporate practices minimize the environmental footprint, support workplace diversity, and enhance product quality and safety. Some, but not all, avoid business involved with alcohol, tobacco, gambling, and weapons. This is known as “negative screening.” However, just avoiding investing in these businesses is often too narrow of a definition describing the strategies used in SRI. The term often covers more proactive practices such as impact investing, shareholder activism, and community investing. These strategies incorporate a “positive social screening” component into the investment process. Although each is different, impact investing, shareholder activism, and community investing, all seek to bring about positive change as well as achieve financial returns.
We now see Socially Responsible Investing evolving to what is being referred to as “Sustainable and Responsible Investing” (SRI). This is the full integration of Environmental, Social, and Governance (ESG) factors into investment analysis and decision making. It seeks to deliver superior long-term investment performance using traditional financial analysis and innovative ESG analysis in an effort to identify companies with sustainable business models. This can help investors capture the returns associated with the unprecedented migration underway from and industrial economy to a sustainable economy.
At HCCM, we provide our clients with access to sophisticated ESG investing solutions in an easy, turnkey way. We use a manager-of-mutual fund managers approach to provide clients with a highly diversified portfolio of funds that offer the potential advantages associated with investing in companies that stand to profit from the global shift to a sustainable economy. These manager-of managers portfolios have been designed and constructed by Morningstar Associates using proprietary research and analytics to select the mutual fund managers, structure the portfolios and monitor the investments on an ongoing basis.