Want to put your investments where your values are? Find out how to do it through ESG investing on our latest #YouandYourMoney podcast featuring Michael Baum, CFP®, RICP®.
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Want to put your investments where your values are? Find out how to do it through ESG investing on our latest #YouandYourMoney podcast featuring Michael Baum, CFP®, RICP®.
- Subscribe to the You and Your Money podcast
- Follow us on Facebook, Instagram, LinkedIn and YouTube
- See how we can help you create a tailored strategy to help you Plan Well, Invest Well and Live Well: whzwealth.com
Welcome to “You and Your Money”. Empowering you to reach your goals with tips to help you Plan Well, Invest Well and Live Well. I'm Jim Zahansky, principal managing partner and chief goal strategist at Weiss, Hale and Zahansky Strategic Wealth Advisors. Today's episode features Michael Baum, vice president and associate financial advisor at Weiss, Hale and Zahansky Strategic Wealth Advisors. Let's dig in to today's topic. Joining us today, Michael Baum, vice president and associate financial advisor at Weiss, Hale and Zahansky Strategic Wealth Advisors. Welcome back, Mike. Hey, thanks for having me back, Gary. It's good to have you here today. We've got a lot to unpack today in honor of Earth Day. I love Earth Day. It's coming up this weekend. Mike and I will be talking about how to go about making investments that are environmentally friendly as well as potentially and hopefully friendly for your portfolio. So let's get into Earth Day. So it's coming up this weekend and many people are thinking about ways to be more green in everyday life. That's always a good idea. But how, Mike, how exactly can you invest in an environmentally friendly and sustainable way? Right? So you don't need to limit your conservation efforts to just Earth Day or even just physical activities are choices that you make. We can all make changes in our own lives to help make the world a better place. And that includes in your investment portfolio, believe it or not. So the way to do that is to take an ESG approach to investing. And ESG stands for environmental, social and governance. So what ESG, what ESG investing is, is essentially taking into account not just how well a company does financially when deciding whether or not to invest, but also its environmental and social impact, as well as how ethically it governs itself as a company. All right. So that's very interesting to unpack. How common is this type of investing? It's actually more common than you might think, and it's growing in popularity. More and more people are becoming conscious of making investments that align with their values. And ESG investing is probably the biggest example of that. Many investments even have an ESG score that you can look up that determines how well they adhere to environmental, social and governance guidelines based on a variety of factors. So this sounds like a win win for all around. Do you think you could break down, though, what those environmental, social and governance benefits are for us? Yeah, absolutely. So from an environmental perspective, some of the factors they would be considering are things like the company's impact on deforestation, carbon emissions, air and water pollution, as well as how it uses water for production, how it uses fossil fuels, or whether it uses green energy and it's in its production or processes. Some of the social aspects considered in ESG investing would be things like customer satisfaction, employee diversity and protections, sexual harassment and protected class policies, fair labor practices and human rights issues. And lastly, from the governance standpoint, board member diversity and corporate conflicts of interest, as well as executive salaries and the company's involvement in lawsuits or lobbying are things that they'd be looking at. All right. So those are the benefits to ESG investing in terms of supporting companies that are environmentally and socially conscious. But does ESG investing perform as well financially as other types of investments? Because that's why we invest. Right. Right. I'm glad you asked, Gary, because not only can ESG investing be better for the environment and social justice, but it can also be great for investors. So I need to take a step back and note here that all investments are subject to risk, of course, including the loss of principal. So environmental, social and governance criteria are a set of non-financial principles and standards that we would use to evaluate potential investments. And the incorporation of ESG principles provides a qualitative assessment that can that can weigh in the securities selection process. But the investment socially responsible focus may actually limit your investment options available to you as an investor. And as is always the case, past performance is no guarantee of future results. That said, talk with your advisor about ESG funds and their historical performance to see if that performance matches your expectations and benefits your personal financial plan. All right. And thanks for the disclaimer. Love the disclaimers. But it sounds like ESG investing is getting pretty popular then. Yeah, it's hugely popular now for investors of all backgrounds, really, and people who are investing a little or investing a lot. So, Fast Company reported that global investors poured about $120 billion into sustainable investments in 2021, which is more than twice the 51 billion in ESG investments in 2020. So as of right now, about one third of all assets contain sustainable investments. So what do you have to do if you've decided that you want to begin ESG investing? What are the first steps, Mike? Well, ESG investing should really be part of a larger overall financial strategy. But having said that, it can be a really valuable tool in creating a portfolio that reflects your values. If you've decided that ESG investing is aligned with your personal goals and values, there are a couple of ways to get started. So ESG investments can be both individual stocks and mutual funds. So one option is to look at your existing portfolio, do some of your own research to find specific ESG investments, to add to that mix, that align with your financial goals, risk tolerance and personal values. Another option is to work with a financial advisor or wealth management firm with experience in ESG investing. Look for an advisor or a firm that acts as a fiduciary, which means they’re required to act in your best interest, and who believes in being a good global citizen through their business practices and the investment options they offer to their clients. They'll be really well equipped to help you build a portfolio that's best set up to serve both your financial goals and your values. All right, Mike, pretty good information right there. Thanks for sharing with us today. And, well, it seems like a powerful and constructive way to support the environment. It really is. And it's something that we're happy to do with our clients at Weiss, Hale and Zahansky. We're really proud to maintain a strong commitment to supporting environmental and social causes in alignment with our own mission of helping others to live well. So ESG investing is a natural extension of that, and we're happy to talk with anyone looking to build or adjust their portfolio so that it's environmentally and socially conscious while still putting their financial and life goals front and center. Just give us a call at 860-928-2341 or request a complimentary consultation on our website at whzwealth.com. Good job today, Mike. Thanks for coming in. Anytime, Gary. Thanks for having me. That brings us to the end of this episode. As always, thanks for listening to “You and Your Money” and find even more episodes, videos and other resources at our website whzwealth.com. Be sure to come back next week for more tips to help you live fearlessly and pursue your financial and life goals. Until then, live well. Weiss, Hale and Zahansky Strategic Wealth Advisors offer securities and advisory services through Commonwealth Financial Network, member FINRA / SIPC, a registered investment advisor. Fixed insurance products and services offered through CES Insurance Agency. They practice at 697 Pomfret St, Pomfret Center, Connecticut, 06259 and can be reached at 860-928-2341. Weiss, Hale and Zahansky Strategic Wealth Advisors do not provide legal or tax advice. The tenured financial services team strives to support clients in achieving their financial life goals. For more information regarding wealth management and customized financial planning with Weiss, Hale and Zahansky Stategic Wealth Advisors, please visit www.whzwealth.com.