Skip to main content

Check out our 3Q2021 Market Review & Outlook Video + Blog!

FYI Sustainable Investing blog Image

Sustainable Investing: What It Could Mean for Your Portfolio

Photo of author, Monica Garver, CPA, CFP®, AIFA®, CDFA®.
Monica Garver, CPA, CFP®, AIFA®, CDFA®
Director of Retirement Plan Services and Financial Strategist

What is Sustainable Investing?

To start let’s define sustainable investing:

Sustainable investing combines traditional security analysis with environmental, social and governance (ESG) insights. ESG was coined in 2005 by the United Nations in a Report entitled “Who Cares Wins” and instituted the Six Principles for Responsible Investing, or PRI.

The United Nations created Ten Principles of the UN Global Compact with the 10th principle being added on June 24, 2004. They are as follows:

Corporate sustainability starts with a company’s value system and a principles-based approach to doing business. This means operating in ways that, at a minimum, meet fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption. Responsible businesses enact the same values and principles wherever they have a presence, and know that good practices in one area do not offset harm in another. By incorporating the Ten Principles of the UN Global Compact into strategies, policies and procedures, and establishing a culture of integrity, companies are not only upholding their basic responsibilities to people and planet, but also setting the stage for long-term success.

The Ten Principles of the UN Global Compact are derived from the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention Against Corruption.

Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights

Principle 2: Make sure that they are not complicit in human rights abuses

Labour

Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining

Principle 4: the elimination of all forms of forced and compulsory labour

Principle 5: the effective abolition of child labour

Principle 6: the elimination of discrimination in respect of employment and occupation

Environment

Principle 7: Businesses should support a precautionary approach to environmental challenges

Principle 8: undertake initiatives to promote greater environmental responsibility

Principle 9: encourage the development and diffusion of environmentally friendly technologies

Anti-Corruption

Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery


What is ESG?

Sustainable investing is the umbrella category of investment strategies. ESG describes the metrics that drive sustainable security selection:

  • Environmental – climate change, natural resource use, pollution & waste, Clean tech
  • Social – human capital, product liability, data privacy, health & safety
  • Governance – accounting practices, ownership & control, Board independence, ethics

ESG investing refers to the practice of evaluating and selecting companies or funds based on their business practices, with the goal of identifying risks and opportunities related to ESG that may not be considered by traditional financial analysis.

To learn more about implementing an ESG investment strategy, please watch this video and discuss the opportunity with your advisor.

Related Insights
DPN blog pic

Post-COVID, Markets Prepare for Transition

The S&P 500 hit new all-time highs again in the third quarter as investors looked past a resurgence of COVID-19 cases in the U.S. and instead focused on the positive combination of a resilient economic recovery, ongoing historic support from the Federal Reserve, and strong corporate earnings. Market volatility did pick up notably during the final few weeks of September however, reminding investors that the transition to a post-pandemic “new normal” isn’t always going to be smooth. We dig deeper into performance and outline the actions we took in McKinley Carter portfolios, plus provide our best-thinking on what's ahead.

Read More
I Stock 119135127 DPN FINA Limage 800px

A Goldilocks Economy Sends Stocks to New Highs — Will the Bears Have the Last Laugh?

Looking back, the S&P 500 had a strong second quarter thanks to numerous positive developments that led to a “Goldilocks” economic environment. We dig deeper into performance and outline the actions we took in McKinley Carter portfolios, plus provide an outlook for the remainder of 2021.

Read More
Jamie street Nv W y2s O Jtc unsplash DPN article crop for CRAFT

The Light at the End of the Tunnel: Stimulus and Vaccine Optimism Power Markets Higher

The first quarter of 2021 was marked by several macro- and micro-economic surprises that resulted in increased market volatility compared to the fourth quarter of 2020, but additional economic stimulus combined with accelerating COVID-19 vaccine distribution and a decline in coronavirus cases helped stocks start the new year with solid gains. Take a look back with us at the first quarter of 2021. Review what actions we took on client portfolios as market dynamics changed. And learn what we expect for this year in our 2021 economic outlook.

Read More
Play