What we at Vestive call sustainable investing, others sometimes call impact investing. Or they might call it socially responsible, ethical, environmental or ESG investing. There are a lot of terms for the same basic idea.
So, what does this actually mean? It means that when making investment decisions, we consider a range of environmental and social factors, in addition to financial ones. At Vestive, we score our investments on factors like carbon emissions, alternative energy, high-impact fossil fuels, women in leadership, gun manufacturers, tobacco manufacturers and labor norms violations, among others.
For issues that are having a negative impact on our world, such as high-impact fossil fuels or companies with labor norms violations, we screen companies out. At the same time, we increase our investment in companies that have a positive impact, like those in the alternative energy industry.
Some versions of sustainable investing focus on just one issue, like climate change, but we take a broader approach. Otherwise, you might end up with a portfolio that has a low carbon footprint, for example, but has a terrible track record on how they treat their workers. Evaluating a fund’s impact holistically allows your money to have the greatest overall impact.
When evaluating a company we cannot only consider the end product produced. Often a significant portion of a business’ sustainability impact is driven by secondary factors like its supply chain, workforce diversity, and corporate governance. This approach ensures that companies that use an electric truck fleet, or have a diverse workforce and leadership, for example, can score better in our book and be a bigger part of Vestive portfolios.