The three dimensions of investing: Risk 🏋+ Return 💸 + Impact 🌳
Welcome to Sustain. We take a different approach to investing. At Sustain, we help you to know what you own and empower you to vote on a world you want to see!
One common and false assumption surrounding sustainability and profitability is that they are at odds with each other. The truth is, every single investment contains risk, potential reward, and will have an impact on the world.
Reward is not only dependent on profitability alone, rather, it is contingent on how those profits are reinvested, the value proposition delivered to the customer, and the probability profits can last far into the future. These factors are deeply intertwined with issues of sustainability.
Firms may maximize profits at the expense of their employees, customers and the environment — directly or indirectly harm their customers — developments that may not be apparent at first glance. Yet these firms and their intrinsic value are subject to outsized risk such as stranded assets, increasing compliance costs, regulation, operational disturbance, or damaged brand equity. This ends up destroying shareholder value over long-term holding periods.
That’s right: short term profit maximising can hurt profits in the long term.
It is perfectly okay to want your investment to gain the maximum return possible — I mean, who in their right mind wouldn’t? Over time though, the asset management industry has turned this desire into profit for itself. This is why hedge funds are able to charge exorbitant fees, underperform the market on average, and still receive inflows of money from pension funds. Frequently, the beneficiary owners of those pensions aren’t aware this is going on, nor are they aware of the social or environmental impact of the companies they own.
The grand allure of excess return without acknowledgement of real world impacts have misaligned the incentives of financial stewards. As we know and you may learn, this allure is a fallacy. The biggest difference between long-term investment performance over a 30-year period is not the asset manager, but in fact the differences in fees the manager charges. This is why Vanguard — a manager with extremely low fees that simply owns the entire market — has been so successful.
Beyond Vanguard is a new vision, however. One where the community owns the market as a whole, and collectively encourages investments with positive impact and discourages projects and practices that detract from the environment and society. This will be done through transparency. This will be done by you with the help of Sustain!
Learn more about Sustain at SustainInvesting.com or check out these blog posts from our co-founder, Chris:
Global Financial Markets are Broken
Can we radically transform the stock market? Launch in T-3 days 🚀
Sustain: where did the idea come from? Meet the original founder, Andre Shepley
