Purpose-Driven Investing is More than Just a Score
Socially responsible investing and impact investing are creating a paradigm shift for many investors. Investors are wary of fossil fuels, weapons, and tobacco companies, and are incorporating solutions-based approaches that focus on the environment and social factors. The growth has shown up numerically as SRI has grown from a $2 trillion industry in 2004 to a $17 trillion industry in 2020, according to the US Forum for Sustainable and Responsible Investment. This is driven by the 85% of millennials who believe their investment decisions impact climate change and 71% of the general public who think the same. However, these investors are savvy; and while Environmental, Social, Governance (ESG) impact scores and rating systems have been popular to expand public knowledge, SRI investors are aware of the faults. According to a report by Morgan Stanley, despite positive ESG ratings, companies like Exxon Mobil, McDonald’s, Raytheon, and DuPont are turn-offs for clients. Clients are looking for more than just an impact score. They want a history of purpose investing, rather than the bare minimum greenwashing to appear in ESG funds.
Learn more about why ESG investors are different and explore ideas for how best to approach them.
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