Money talks, especially when you have almost $9 trillion at play. The total dollars invested in the United States through sustainable, responsible and impact investing reached $8.72 trillion in 2016, up 33% from 2014, according to the US SIF Foundation’s latest biennial “Report on US Sustainable, Responsible and Impact Investing Trends.”
Increasingly, money managers and institutional investors across the United States are evaluating their investments in stocks, bonds, private equity and other vehicles on environmental, social and governance (ESG) factors. The growing trend toward responsible investing is driven by client demand: Many individual investors and institutions want to make sure that the enterprises in which they invest don’t fund practices that run counter to their personal or organizational values.
But ESG investing also attracts value as well as value investors. Most studies of long-term portfolio performance show that investors who consider ESG factors in addition to standard financial measures fare slightly better than those who build their portfolios based solely on traditional criteria.