As part of the Providence Climate Agreement entered into by the Sisters of Providence, Providence Associates and others, some pledged to “greening” their investments.
The question then emerged, how do I do that? Through such a pledge, people are seeking ways to connect their values of climate injustices and a healthy Earth environment and their investing. They are seeking sustainable investing as part of their commitment to this agreement.
As the chair of the Sisters of Providence Ethical Investment Task Force, I offer this brief information on sustainability investing that I hope will be helpful in your conversations with an investor company agent as you make decisions for both sustainable Earth and you.
Sustainable investing is a way of investing that provides strong returns while also allowing the investing party to stay true to their values. Sustainable investing focuses on doing good for the world, unlike more traditional investing, whose aims are generally strongly focused on individual gain.
To my knowledge (which is limited), there are three areas of sustainable investing, including:
- Socially Responsible Investing (SRI) or Exclusion Investing, which involves excluding (doing a negative screen on) those assets from one’s portfolio that do not coincide with one’s values (e.g., military weapons, deforestation, etc.),
- ESG (Environmental, Social and Governance) integration investing, which allows one to reflect his/her values in the portfolio by measuring ethical impact of an investment in a company. For example, you can invest in a company that focuses on environmental (reducing pollution), social (human rights), and governance (stopping corruption) issues. It is an integrative investing strategy, and
- Impact investing, which actively seeks positive impact around environmental and social effects. Impact investing involves making a difference in measurable ways while at the same time growing one’s money. These investments tend to be more in the private markets, such as private equity, venture capital and debt, fixed incomes and infrastructure.
Adoption of these sustainable investment possibilities is expected to have a growth spurt over the next few years for investors. Investors’ portfolios intend to grow throughout the world. At this time, statistics show that only about a third of investors in the United States are into sustainable investing. And, when they do, there are more investments in the SRI/Exclusion category than the ESG or Impact investments for change.
A review of the data shows that companies’ policies and practices with respect to pollution, climate change and water are highly important to sustainable investors. The more emphasis is given and the more questions and demands we put forth, the more we all can invest in companies that open the way to ESG and Impact investment strategies. A first step in “green investments” is to explore your investment portfolio related to both impact for good for others as well as financial gains for you. Have the conversations with your investment agents. Take a bold step in making changes if necessary.
We can make a change in living out the Providence Climate Agreement through investments that match our values and our commitments. The Sisters of Providence are doing so as a Congregation in investments that do good for others in the world. Will you join in with your investment choices? Will you sign on to the Providence Climate Agreement if you haven’t done so?