Helping Clients Align Their Investments With Their Beliefs, Values, and Morals

Socially responsible investing (SRI)—also referred to as sustainable investing, impact investing, or ESG (environmental, social, and governance) investing—has become increasingly popular as more consumers seek to achieve their financial goals while having a positive impact on people and the planet.

However, misconceptions about SRI have caused some advisors to avoid presenting it as a strategy to their clients— an unfortunate reality, since offering products that resonate with clients on a personal level is a great way to differentiate and grow your advisory business, and SRI is one of the fastgrowing trends in the investment industry. Institutions such as pension funds, foundations, universities, and nonprofit and religious organizations all practice socially responsible investing. First, the SRI tent is bigger than many advisors may think—it’s not just about renewable energy stocks and organic pet food. Socially oriented investors may seek out investments they believe will provide societal and environmental benefits (or at least do no harm in these areas), but they’re also interested in those that promote positive employee and customer relationships, as well as those that embrace "enlightened" executive compensation plans and shareholder rights.

Second, like anyone else, socially responsible investors seek strong financial performance and competitive returns, and they range from average retail investors to high-net-worth individuals and family offices. And their numbers are growing.

Rapid growth in SRI

The SRI industry has experienced rapid growth in recent years. According to the Forum for Sustainable and Responsible Investment Foundation (US SIF), total U.S.-domiciled assets under management (AUM) held within investments that use SRI strategies grew by 42%—from $12 trillion to $17.1 trillion—between 2018 to 2020, and at the end of 2020 more than one out of every three dollars under professional management in the U.S. was invested according to SRI strategies.

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