Skip to content
twitterfacebooklinkedinyoutubeenvelope
  • T: 727.567.1000
  • F: 866.597.3988
Feel free to reach out.
  • Home
  • Our Team
    • Our Team
    • Gregory Makowski
    • Harris Nydick
    • Edward Swikart III
    • John Bartlett
    • Alexandra Makowski
    • Philip Nydick
    • Anthony Ghetian
    • Robert Jaffe
    • Alexander Paszkiewicz
    • Christina Leavy
    • Susan Sharma
    • Working With a CFP
    • AIF and AIFA
    • Awards and Recognition
    • In the News
    • Join Our Firm
  • Our Clients
    • Our Clients
    • Wealth Management
    • 401(k) & 403(b) Process
      • 401(k) & 403(b) Process
      • Service Comparison
    • Services
      • Services
      • Banking & Lending Solutions
      • Estate Charitable Giving & Trust
      • Retirement Planning
      • Longevity Planning
      • Risk Management
      • Education Planning
      • Goal Planning & Monitoring
      • Sustainable Investing
      • Business Planning
      • Corporate Retirement Plan Consulting
      • Fixed Income Services
      • Institutional Consulting
  • Resources
    • Resources
    • Client Access Videos
    • Behavioral Finance
      • Behavioral Finance
      • Familiarity
      • Loss Aversion
      • Overconfidence
      • Mental Accounting
    • Book Page
    • Worthwhile
  • Contact Us
  • Client Access
    • Client Access
      • Forgot your password?
      • Enroll
      • Need Help?
      • Contact Us / FAQ
      • Privacy / Security
      • Client Resources
    • Fiduciary Briefcase
  • CFSIAS
    97 Lackawanna Ave., Suite 101 Totowa, NJ 07512-2332 T: 973.826.8800 F: 973.256.8688
    Map and Directions Map and Directions
CFS common sense logoCFS common sense logo

The goal of investing is more than just financial growth

Sustainable investing, an approach that integrates environmental, social and governance (ESG) criteria, is becoming a much sought-after strategy in the financial industry. Whether implemented through socially responsible investing (SRI) screening, ESG integration or impact investing, sustainable investing offers a growing number of options for investors interested in pursuing goals beyond financial growth when building their portfolios. Incorporating sustainable investing criteria into the investment selection process may result in investment performance deviating from other investment strategies or broad market benchmarks.

Incorporating sustainable investing criteria into the investment selection process may result in investment performance deviating from other investment strategies or broad market benchmarks.

  • Through sustainable investing, not only can investors aim to make a positive impact on society and the environment, they can potentially improve the risk/return characteristics of their portfolios by factoring environmental, social and governance (ESG) criteria into their investment decisions.

    Objectives:

    • Encourage positive environmental, social or governance practices
    • Align investments with personal values
    • Potentially improve portfolio risk/return characteristics
     
    Desired Outcomes:
    Whereas conventional investing is focused on risk/return, and philanthropy seeks solely to benefit charities and causes without return or income consideration, sustainable investing looks to accomplish both in varying degrees along a spectrum of possible outcomes.

    Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.

  • While there is a common theme of pursuing a greater purpose, there is much variety within sustainable investment strategies, particularly in how they are implemented. Implementation generally takes the form of one or more of the following approaches:

    Exclusionary screening:

    • Viewed as the original approach to “responsible” investing
    • Also known as socially responsible investing or negative screening
    • Excludes individual companies or entire industries from portfolios if their activities conflict with an investor’s values, such as fossil-fuels, gambling or alcohol
    • Limits investable universe, which could impact diversification

    Integration

    • Combines ESG criteria with traditional financial considerations
    • Gaining momentum as portfolio managers consider ESG themes in their decision-making process
    • Sometimes implemented by identifying and investing in companies that are the best ESG performers within a sector or industry group
    • A study conducted by the CFA Institute cites integration is the most commonly used method1

    Impact investing2

    • Aims to have a social or environmental impact alongside financial return, with a focus on intentionality and measurement of impact
    • Ranges from grant support to private equity; liquidity risk and return target can vary dramatically
    • Most common products are funds invested in private equity and venture capital
    • Accredited investors and funds are the leaders in impact investment by asset level

    Other dimensions

    • Thematic investing – focuses on a specific ESG theme, and structures a portfolio around companies or industries that support that theme
    • Shareholder engagement (activism) – actively engages with a company, directly working with management or exercising shareholder rights to effect change

    1 CFA Institute, “ESG Issues in Investing: Investors Debunk the Myths.” 2015
    2 Global Impact Investing Network, “What You Need to Know About Impact Investing,” https://thegiin.org/impact-investing/need-to-know/#s2

  • The paths to pursuing effective global stewardship and possible growth are coming together in the investor mindset. Sustainable investing, when incorporated into a well-defined, long-term investment plan, can be a powerful tool in addressing global challenges while achieving personal financial goals.

    Investors may consider sustainable investing for a host of reasons:

    • Risk Mitigation: Companies that ignore their social and environmental impacts may face regulatory and governance risks.
    • More conscious approach to investing: Investors may aim for a positive impact or avoid ties to questionable activities.
    • Long-term performance: Companies with a negative reputation or poor business practices may not be sustainable.
    • Align investing with personal or religious views: Investors may not feel comfortable investing in companies whose business practices they view as morally objectionable.
    • Fiduciary duty: Professional asset managers have a responsibility to invest within certain standards that represent their clients’ interests, which would likely make investments in companies with unsustainable practices less appropriate.

Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Sustainable/Socially Responsible Investing (SRI) considers qualitative environmental, social and corporate governance, also known as ESG criteria, which may be subjective in nature. There are additional risks associated with Sustainable/Socially Responsible Investing (SRI), including limited diversification and the potential for increased volatility. There is no guarantee that SRI products or strategies will produce returns similar to traditional investments. Because SRI criteria exclude certain securities/products for non-financial reasons, investors may forego some market opportunities available to those who do not use these criteria. Investors should consult their investment professional prior to making an investment decision.

There is no assurance that any investment strategy will be successful. Investing involves risk and investors may incur a profit or a loss.

related resources

Wildfires, carbon sinks and the value of forestry policy

Wildfires, carbon sinks and the value of forestry policy

06/26/2023
Did you know that American forests offset 12% of total U.S. emissions? With wildfires making headlines, Pavel Molchanov discusses crucial reforestation efforts.

Technology & Innovation
Aligning specialized investments with values to create change

Aligning specialized investments with values to create change

Ask the right questions to pursue specific goals.

Technology & Innovation
The benefits of investing with intention

The benefits of investing with intention

Align your values with specialized investment and philanthropic vehicles.

Estate & Giving
Why choose sustainable investing?

Why choose sustainable investing?

Explore four reasons many investors look closely at ESG criteria.

Markets & Investing
Quick facts about the bright future of solar energy

Quick facts about the bright future of solar energy

Interest in solar energy is soaring — and for good reason.

Technology & Innovation
Sustainability’s imprint on the business world

Sustainability’s imprint on the business world

As investors and consumers seek sustainability, companies transform their approach to solving some of the world’s biggest challenges.

Markets & Investing
Sustainable Investing's Global Rise

Sustainable Investing's Global Rise

Investing in companies that proactively manage environmental, social and governance issues is growing in popularity.

Markets & Investing
Sustainable Investing Misconceptions vs. Reality

Sustainable Investing Misconceptions vs. Reality

Set the record straight when it comes to these four common misunderstandings.

Markets & Investing
Transportation’s Evolution, From Electric Buses to Hyperloop

Transportation’s Evolution, From Electric Buses to Hyperloop

Planes, trains, cargo ships and autos are getting high-tech help in easing off the fuel pedal.

Technology & Innovation
Retail Is Reimagined With Circular Design, Green Packaging

Retail Is Reimagined With Circular Design, Green Packaging

Sustainability is catching on, from small startups making green jeans to giant retailers making bold moves.

Technology & Innovation
How AI and clean tech help create better, greener buildings

How AI and clean tech help create better, greener buildings

From the data center to the daycare center, real estate developers are transforming buildings’ carbon footprint.

Technology & Innovation
Food and Beverage Companies Plant Seeds of Sustainability

Food and Beverage Companies Plant Seeds of Sustainability

From farm to fork, the industry is innovating and streamlining to feed more while reducing greenhouse gas emissions.

Technology & Innovation

Add common financial sense to your life

CFS common sense logoCFS common sense logo

complimentary portfolio review

  • 97 Lackawanna Ave., Suite 101 Totowa, NJ 07512-2332
  • T 973.826.8800
  • F 973.256.8688
  • Map & Directions
  • Map & Directions
twitterfacebooklinkedinyoutubeenvelope

Form CRS

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™,  CFP Logo Flame Design and  CFP Logo Plaque Design in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

CFS Investment Advisory Services LLC is a Registered Investment Advisor ("RIA"), located in the State of New Jersey. CFS is registered with the SEC. CFS Investment Advisory Services provides investment advisory and related services for clients nationally. CFS Investment Advisory Services will maintain all applicable registration and licenses as required by the various states in which CFS Investment Advisory Services conducts business, as applicable. CFS Investment Advisory Services renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or pursuant to an applicable state exemption or exclusion.