Myth vs. Reality: 3 of the Most Common Myths About Sustainable Investing
What is sustainable investing?
It’s a way to invest and seek returns you expect while staying true to your values. That’s whether you care about a cause, driving social change, or how a company or country conducts itself.
Myth #1 You need to be an expert
Realty: A simple way to choose solutions that align with your values is to consider sustainably investing directly in diverse and equitable founders, mutual funds, SMAs or ETFs. By 2023, investors expect sustainable investing to be the norm, so join the movement.
We want to shape the future of sustainable investing. Why? Because we believe these investments can deliver returns with less risk to your money. We are also confident that sustainable investing will soon become the world’s most widely accepted way of investing.
Myth #2 You can’t measure the impact
Reality: Measured impact is a requirement of impact investing, so you can actually see the difference you’re making. Even more promising, companies and funds are reporting their social and environmental impact.
Myth #3: You sacrifice performance
Reality: Sustainable investment returns can be comparable to what you can expect from conventional ones. According to research, investing sustainably can improve returns or doesn’t harm them. So it’s little surprise the global sustainable investment market is growing.
Here’s the truth about sustainable investing
Myth: “You give up returns with sustainable investments.”
Reality Actually, returns are comparable to traditional investments. Historically, the S&P 500 Index and the MSCI KLD 400 Social Index, a sustainable equivalent to the S&P 500, perform similarly.
Myth: “Sustainable investing is only about protecting the environment.”
Reality Sustainable investing incorporates environmental, social and governance (ESG) considerations. Social and governance issues include health and safety, privacy and data security, labor management and business ethics.
Myth: “You can’t measure the impact of a sustainable investment.”
Reality Funds and companies are increasingly reporting on their social and environmental impact. Impact investing, the most intentional sustainable investing strategy, does require measurement.
Myth: “I need to be an expert to do sustainable investing.”
Reality Sustainable investing mutual funds, SMAs and ETFs are commonplace today. By 2023, investors expect it to be mainstream.
Myth: “Sustainable investing is niche and is a fad.”
Reality According to the Global Sustainable Investment Alliance, sustainable investments totaled $23t assets in 2016. Global exchanges had a value of $69t that same year.
Myth: “Sustainable investments aren’t liquid.”
Reality You can find sustainable investing solutions in public equities and fixed income, in addition to private equity and private debt.
Myth: “Sustainable investing means excluding companies from your portfolio.”
Reality Exclusionary screening — removing companies that are not values-aligned — is only one sustainable investing approach, alongside ESG integration and impact investing, which are more positive, intentional approaches.
Myth: “Wealthy investors don’t invest sustainably.”
Reality In the U.S., the richest wealth segment invests sustainably far more than any other. A full 40% of investors with $50M+ invest sustainably, compared to 8% of those with $1–2M
Source: Bloomberg, as of August 31, 2018. Global Sustainable Investment Alliance: “Global Sustainable Investment Review,” 2016.
Ready to learn more ways you can get involved?
UBS Investor Watch: “Return on values,” 2018. In providing wealth management services to clients, we offer both investment advisory and brokerage services which are separate and distinct and differ in material ways. For information, including the different laws and contracts that govern, visit ubs.com/workingwithus.
ESG investing risk — Environmental, Social and Governance factors may inhibit a portfolio manager’s ability to participate in certain investment opportunities that otherwise would be consistent with its investment objective and other principal investment strategies. Underlying companies in a particular fund may not necessarily meet exemplary standards in all aspects of ESG performance; nor is any company perfect when it comes to corporate responsibility or sustainability. Past performance is no guarantee of future results.
Standard & Poor’s 500 Index — is a commonly recognized, market capitalization weighted index of 500 widely held equity securities, designed to measure broad U.S. equity performance. Covers 500 industrial, utility, transportation and financial companies of the U.S. markets (mostly NYSE issues). Individuals cannot invest directly in any index.
The MSCI KLD 400 Social Index is designed to provide exposure to companies with high MSCI ESG Ratings while excluding companies whose products may have negative social or environmental impacts. It consists of 400 companies selected from the MSCI USA IMI Index, which includes large-, mid and small-cap US c
Learn more about how to get involved in this fastest growing investment category globally with us at SheTransacts.
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