You can invest for your future and take care of the planet. Marin Wealth Advisors offers carefully curated investment portfolios centered on funds and companies that meet high environmental, social, and governance standards. Our ESG portfolio management services allow you to build wealth while building a better world.
What Is ESG Portfolio Management?
ESG portfolio management includes making sure that all the investments in the portfolio continue to meet ESG standards, in addition to rebalancing and adjusting the portfolio to maintain risk level and returns. Marin Wealth Advisors provides fee-for-service management for our ESG portfolios and investment clients. Our ESG investments are created using all exchange-traded funds (EFTs).
ESG portfolios, like all investments, aren’t static, and even companies with excellent environmental, social, and governance practices sometimes fail. Portfolio management is essential to maintaining your assets and ensuring that they continue to serve your financial goals.
How Environmental, Social, and Governance Investing Adds Value to Your Portfolio
To qualify as an ESG investment, a company or fund must achieve a high score on environmental, social, and governance metrics. ESG portfolios often match or outperform traditional investment portfolios because the companies that meet ESG standards tend to be better-run, healthier, and more able to maintain stability during market shocks.
Companies that adapt to the world around them are more than just suitable investments for building wealth. When picking an ESG portfolio that fits your risk tolerance, you’re also choosing investments that match your values. You can feel good knowing your money is supporting companies that work to minimize environmental damage and treat workers and communities with respect.
And choosing environmental, social, and governance funds doesn’t mean limiting your investment choices. Your Marin Wealth Advisors financial planner has a wide range of funds to build ESG portfolios. In addition, the rise of ETFs has created terrific opportunities for dynamic ESG portfolio management.
Why ETFs (Exchange Traded Funds) Are a Good Choice for Your ESG Portfolio
Exchange-traded funds are similar to mutual funds and index funds because they hold many investments rather than a single stock or bond. ETFs can be tied to specific indices, just like index funds, or they may be structured around a particular type of investing, such as ESG. However, unlike mutual funds and index funds, ETFs are freely traded on the stock exchange. That gives them several advantages over traditional funds.
Reduced capital gains tax exposure
When you sell shares in an exchange-traded fund, you may owe capital gains taxes on the profit you make from your sale. However, index and mutual funds are structured differently, and the capital gains taxes are distributed among all the investors. Therefore, you can owe taxes even if you haven’t sold or traded shares. While the amounts may be small, they can add up over time, so ETFs provide more robust long-term investments.
Lower minimum investment
Most traditional investment funds require a minimum initial investment, though a growing number of funds today have low or no initial investment minimums. By contrast, ETFs generally don’t have minimums, giving Marin Wealth Advisors financial planners flexibility to optimize ESG portfolio management.
Low administration costs
Exchange-traded funds aren’t unique in having low administration costs, but that is one of the benefits of ETF investing. Savings of even fractions of a percent in fees can add up to hefty gains due to compounding on long-term investments. At Marin Wealth Advisors, we always consider costs when assembling ESG portfolios.
Because ETFs are traded on the stock exchange, they can be bought or sold whenever the exchange is open. Mutual funds and index funds, on the other hand, have more restrictive policies, so when you initiate a sale or trade, the transaction may not happen immediately. The liquidity of ETFs is an asset for investors and ESG portfolio managers.
Add ESG to Your Portfolio for Environmental Sustainability
The first principle of ESG investments is environmental sustainability, which is more critical than ever. Climate change is here now, not something for future generations to manage. Companies that remain wedded to fossil fuels may offer great returns today, but their contribution to global warming makes them less reliable sources of investment returns in the future.
The primary ESG rating organization, MSCI, uses a detailed set of data points to determine corporate ESG ratings. It has identified 13 key issues in four categories in its environment pillar:
- Climate change: This category covers issues from carbon emissions to climate change vulnerability
- Natural capital: This category examines corporate impacts on biological systems with metrics including water and land use, impact on biodiversity, and raw material sourcing
- Pollution & waste: Toxic emissions, packaging, and electronic waste fall into this category
- Environmental opportunities: Companies can get positive points for green building, cleantech, and renewable energy use
ESG for Equitable Societies and Respect for Human Rights
Over the long term, companies are built on human capital. Corporations that don’t respect and value their workers, customers, and communities may harm the world, and they’re less likely to thrive in the long term.
Here are the MSCI categories for scoring companies on the social pillar:
- Human capital: The key issues in this category relate to labor, including health and safety. Supply chain labor standards are part of this category; ESG ratings don’t let companies off the hook for outsourcing poor treatment of workers
- Product liability: Potential liabilities include product safety and consumer data security. Companies with low scores in this area may be vulnerable to lawsuits and recalls that deplete investment value
- Stakeholder opposition: This category covers community relations and controversies over sourcing
- Social opportunities: The positive social category includes social benefits in communication, finance, healthcare access, and nutrition
The Most Often Overlooked Aspect of ESG Investing: Accountable Governance and Transparency
Corporate governance may be the least glamorous element of environmental, social, and governance, but it is critical to savvy ESG portfolio management. A company with the best environmental and social responsibility principles can’t thrive without sound governance.
The MSCI governance pillar ranks companies based on these factors:
- Corporate governance: The score rests on board, pay, ownership, and accounting metrics
- Corporate behavior: Companies are rated based on business ethics standards and tax transparency
Why Choose Marin Wealth Advisors for ESG Portfolio Management?
There are two important reasons for mapping your financial future with a financial planner rather than trying to choose investments on your own.
- A professional financial planner knows how to craft an optimized ESG portfolio. Don’t trust your financial future to your best guess about investments
- It’s easy to make mistakes that can cost you over time. It’s understandable to want to sell when the market is tanking or to put more money into the funds that are doing well rather than rebalancing your accounts, but those are not good strategies for building wealth. The steady guidance of a financial advisor will adjust your portfolio to market conditions when necessary and keep you invested appropriately through all market conditions.
Marin Wealth Advisors services include hourly financial planning, and an investment management based on client assets under our management. Our financial advisors bring decades of experience to ESG portfolio management.
When you work with Marin Wealth Advisors, you get:
Five risk levels of ESG portfolio management: Choose the portfolio that suits your risk tolerance and meets your goals for growth and stability
Quarterly portfolio rebalancing: We rebalance our ESG portfolios regularly to ensure long-term returns
All investments are ETFs: The benefits of ETFs make ESG portfolios an even better investment
Lean on the knowledge of Marin Wealth Advisors plus ESG industry experts: Our ESG portfolio management practice is built on our years of experience, with guidance from ESG experts to pick the best investments
Our ESG Portfolios are built using the same value-driven asset allocation process we use for our traditional portfolios. To find the right balance between risk and reward, we use a disciplined and principled approach to finding the best environmental, social, and governance ETFs to create diversified portfolios.
The Marin Wealth Advisors Fiduciary Promise
At Marin Wealth Advisors, we place our client’s best interests first. From this principle, we commit to the following five fiduciary principles:
- We always put your best interests first
- We act with prudence. We apply the skill, care, diligence, and sound judgment of a professional to your financial plan
- We will not mislead you. We provide transparent, full, and fair disclosure of all critical facts
- We avoid conflicts of interest
- We will fully disclose and fairly manage in your favor any unavoidable conflicts