Environmental, Social, Governance Investing
Outside auditors vet environmental, social, governance (ESG) investments to prove they meet high standards of ecological responsibility, care for their communities, and principled leadership. Marin Wealth Advisors is a leading provider of San Francisco ESG investing advice.
Should ESG Investments Be Part of Your Savings Strategy?
ESG investing can be an excellent way to align your wealth-building strategy with your values. But you don’t have to sacrifice your portfolio to protect the environment and support healthy communities. Within the last several years ESG investments have performed in line with traditional non ESG funds.
Environmental, Social, and Governance Metrics
Morgan Stanley Capital International (MSCI) provides up-to-date reviews and ratings of businesses’ environmental, social, and governance functions using a list of over 200 metrics. The MSCI ESG scoring platform is the gold standard for ESG investments.
The ESG scoring system ranks companies from levels of CCC to AAA, with AAA denoting outstanding performance in all three areas. Companies ranked at the lower end of the ESG scale expose their investors to greater risk because poor ESG performance can be a sign of an enterprise plagued by controversy and legal exposure.
As a San Francisco investor, you need a solid plan to build wealth and save for retirement, buying a home, or sending a child to college. High-scoring ESG investments are a terrific way to boost your savings while helping build a better world for this generation and the next.
Is ESG Investing the Only Game in Town?
ESG-rated investments aren’t the only option if you want a greener portfolio. Some funds may be called sustainable investments or impact investments. Socially responsible investment (SRI) funds exclude companies with a negative social or environmental impact. However, ESG takes it a step further, focusing on businesses and stocks that positively affect the wider world, not just eliminating the most harmful enterprises.
ESG funds, and any investments that fall into sub-categories under ESG, come with trustworthy, verified ratings, so you can be sure your savings has the positive impact you intend. ESG ratings are also a good indicator of the health of a company or stock. That’s why Marin Wealth Advisors centers our socially responsible investment strategies on building robust ESG portfolios for our clients.
Meeting Your Saving Goals with ESG Investments
Marin Wealth Advisors has developed five model ESG portfolios that adhere to strict ESG criteria. Your personal advisor can help you create an ESG portfolio to meet your goals.
How ESG Metrics Build Strong Enterprises
Each ESG metric contributes not only to the health and well-being of local communities and the larger environment but also to ESG-rated companies. Here are some ways that each pillar of ESG adds to corporate stability.
Environmental:
- Companies are less likely to face expensive lawsuits and cleanup costs for spills or toxic emissions when they’re proactive about environmental protection.
- Enterprises that understand resources are finite, and take steps to conserve and shepherd materials, are less likely to be harmed by a supply crunch.
- Companies that tailor operations to conserve resources tend to save money.
Social:
- Employee turnover is a high cost in some industries. ESG companies value job satisfaction, leading to less turnover and more experienced and skilled staff. That, in turn, helps the enterprise thrive.
- Poor employee relations can lead to legal and agency actions that result in fines or labor actions, which can hurt a company’s bottom line.
- Communities value and support businesses that treat their employees well.
Governance:
- Studies have shown that adding gender and racial diversity to boards of directors improves corporate performance.
- Good governance includes robust risk management, improving the long-term health of the enterprise.
- Positive environmental and social measures often start with a strong commitment from leadership, so this metric supports the others.
How Risky Are ESG Funds?
No investment is without risk; even the best-governed company with a strong ESG score can fall on hard times. And, when socially responsible investing was new, those investments may have been perceived as carrying more significant risks than more traditional funds.
However, as ESG investing has moved into the mainstream and ESG funds are thoroughly vetted, responsible investments are no riskier than comparable funds without high ESG ratings. In fact, ESG investments can be a way to reduce risk because of the forward-thinking policies described above. In addition, these businesses aren’t clinging to outdated practices and old industries that could soon phase out. An ESG fund is an investment in the future.
Why Marin Wealth Advisors
Our name says Marin, but we have offices across the Bay Area, including in San Francisco. Our advisors have the expertise and experience to help you create a financial plan that meets your goals and matches your risk tolerance. Whether you want faster growth or greater security, we can develop an ESG portfolio for you.
ESG investing is an excellent way to build wealth and save for retirement, travel, or buying a home. Whatever your life goals, Marin Wealth Advisors can help you determine the best way to achieve them.
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 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.