21 May Sustainable Investing: Make Money Mean More
“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance but also show how it makes a positive contribution to society.” – Larry Fink, CEO of Blackrock
A common assumption about investors is that they “don’t care who wins” if they’re making money. Although this mindset still rings true for some investors, others challenge this stereotype and prefer to “make money mean more.” Because values are important, they have dual goals: making money and doing good. However, this doesn’t necessarily mean that such investors place ethics or values ahead of sound financial decisions.
This emerging viewpoint, called sustainable investing, has gained substantial momentum. Unlike traditional investing, sustainable investing is the revolutionary process of investing in companies and funds that meet specific sustainability standards. It often involves any investment approach that considers environmental, social, and corporate governance (ESG) criteria when selecting and managing investments. However, ESG has a stricter definition than sustainable investing. What constitutes sustainable investing also has a subjective element associated with it.
Published by H. Kent Baker, Hunter M. Holzhauer and John R. Nofsinger in European Financial Review.