Sustainable Investing Gaining Steam

Labels such as socially responsible investing (SRI), “environmental, social, and governance” (ESG), and “impact investing” are often used to describe strategies that invest in ways that can be beneficial for the world. Unfortunately, these similar labels may mean different things to different people and can sometimes create confusion. To provide consistency and minimize confusion, LPL Research has elected to use the more inclusive umbrella term of sustainable investing to describe any combination of the six primary implementation approaches shown below:

Sustainable investing continues to gain steam globally, with assets under professional management totaling $22.9 trillion as of the end of 2015, the latest data available. Although more than half of the assets are in Europe, assets under professional management in the United States more than doubled over the last four years to $8.72 trillion. Many forces are driving this growth, including increased awareness that ESG factors may have a positive impact on performance, and changing demographics, as millennials consistently express greater desire for sustainable investing solutions. Also at work are changing social norms and political polarization, leading some investors to want to see their social views represented in their portfolios. For more on this topic, please see our recent Thought Leadership publication, Sustainable Investing.

IMPORTANT DISCLOSURES

The economic forecasts set forth in the presentation may not develop as predicted.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

Sustainable Investing is subject to numerous risks, chief amongst them that returns may be lower than if the advisor made decisions based only on investment considerations.

*Global Sustainable Investment Alliance, “Global Sustainable Investment Review,” 2016.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

This research material has been prepared by LPL Financial LLC.

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