Happy Earth Day

Earth Day was celebrated on Sunday, April 22, 2018, and this environmentally focused holiday may have some investors thinking about how the companies they invest in impact the world around us. 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, or at least conscientious of, the world. However, these labels—though similar—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 as shown in our Chart of the Day.

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[1]. 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[2]. Chief Investment Strategist John Lynch explains, “Many forces are driving the growth of sustainable investing, including increased awareness that ESG factors may have a positive impact on performance. 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 the Research and Insights section of LPL.com.

 

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.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

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[1] Global Sustainable Investment Alliance, “Global Sustainable Investment Review,” 2016.

[2] SIF Foundation, “Report of Sustainable and Responsible Investing Trends in the United States,” 2016.