Sustainable Investing – the full integration of environmental, social and governance (ESG) factors into investment analysis and decision-making – is one of the fastest-growing segments of the investment market. This recent growth is fueled in part by the realization by advisors, like yourself, that a sustainable investment strategy can help deliver potentially higher returns with less risk. In fact, approximately 80 percent of the assets under management at Pax World now come through investment professionals.
As an advisor, your success depends on your ability to attract and retain clients and assets. By educating your clients about the benefits of Sustainable Investing, you can distinguish yourself in the marketplace, add value to your relationships, and create a unique competitive advantage for your business.
Sustainable Investing Makes Sense
- Long-term investment performance and risk management
Forward-thinking companies with solid financials that incorporate sound environmental, social, and governance strategies into their business models offer long-term investors potentially strong returns with less volatility. In fact, a recent Goldman Sachs research paper reported that “Companies that are considered leaders in ESG policies are also leading the pack in stock performance by an average of 25 percent.1
- Rapidly growing marketplace with a high level of investor interest
A study conducted by Allianz Global Investors found that 49 percent of investors surveyed were likely to invest in the next year in a company or mutual fund looking to provide solutions for environmental problems. Seventy-three percent of those investors said they would need to consult a financial advisor for help investing in the environment. Of those, 83 percent said their financial advisors had yet to suggest such an investment. So, the opportunity is clear.2
- Affluent investor profile
Research recently conducted by Pax World3 found that clients who are responding most enthusiastically to this new direction in investing tend to be:
a. Affluent (and likely to become more so given the generational transfer of wealth)
b. Sensitive, engaged, concerned
c. Active and influential in their professional and social groups
Begin the Conversation
Many mainstream investors are ready to incorporate Sustainable Investing into their portfolios. Conversations about Sustainable Investing can fit well into many of your client interactions, including goal planning, portfolio construction, estate planning, and charitable giving. Thoughtful, engaging conversations about Sustainable Investing can deepen and strengthen your client relationships, further reinforcing your value as a trusted advisor.
If your clients haven’t asked yet about Sustainable Investing, it’s likely they will. We’d like to help you stay one step ahead of them.
For additional information on identifying clients who are right for Sustainable Investing or for more detailed information on the entire Pax World fund offerings, please contact a Pax World representative at 800.767.1729.
1Goldman Sachs Global Investment Research: Introducing GS SUSTAIN. June 22, 2007
2The Allianz Global Investors 2007 Environmental Investing Survey was conducted online by global polling firm GfKRoper from December 14-20, 2007
3Research conducted for Pax World by Linda Callahan & Associates, December 2006.