Sustainable investing – get ahead of client demand

Sustainable investing – get ahead of client demand

According to Morningstar, 72% of U.S. investors have expressed interest in sustainable investing.1 Introduce it to your clients before somebody else does.

The new standard for investing

Just as every day activities have improved thanks to data and technology (i.e. driving a car), so has investing. Explore how sustainable investing can help give a more complete view of the companies you invest in.

  • Let’s flashback to driving a car 15 years ago. Drivers would use rear and side view mirrors to merge, back up, and park. Today, thanks to advancements in technology, we have cars with rear view cameras, collision warnings, and side view sensors. These evolved safety features give drivers a more complete view of their surroundings, helping them make better decisions.

    The same thing is happening with investing.  While traditional financial analysis still anchors investment decisions, the greater availability of sustainable data today gives investors a more holistic view of the companies they invest in.

    Sustainable investing uncovers Environmental, Social, and Governance (or ESG)-related risks and opportunities that traditional security analysis may overlook. By giving investors a more complete view, sustainable investing helps identify companies that may be better positioned for long-term growth. Let’s zoom in.

    Environmental Risks increasingly threaten company profitability through extreme weather, rising sea levels or pollution and waste. Companies exposed to frequent extreme weather events, near the water, or in a wildfire zone, may face disruptions to their operations and threaten their long-term performance.

    Product liability, health and safety, and data privacy are all examples of Social risks to a company. Companies that overlook data security risks may be susceptible to hackers or data breaches that can quickly drive down a stock price.

    Board quality and diversity, fair CEO pay, and accounting practices are all Governance risks. Companies with a diverse and independent board of directors can help reduce the risk of oversight, fraud, and bribery. 

    Sustainable investing doesn’t replace traditional financial analysis – it supplements and enhances it. BlackRock empowers investors to assess ESG risks in their portfolio construction process and makes it easy to get started with solutions across both iShares ETFs and BlackRock active mutual funds.

    Regardless of your views on the future, long-term success is one goal that unifies all investors. BlackRock believes that investments that consider E, S and G metrics can help you pursue long-term success of not just your portfolio, but the world.

The shift to sustainable investing
Advisors are taking a second look at sustainable investing for three reasons: clients are asking for it, competitive performance, and it’s easy to do.
The shift to sustainable investing
Investing sustainably has not come at the cost of performance
By uncovering additional risks and opportunities in a company, ESG can potentially provide better outcomes for investors over the long term.
Investing sustainably doesn’t come at the cost of performance

*Morningstar, as of 12/31/2020. Annualized NAV returns shown. Correlation time period is since ESGU's inception, using daily returns. The MSCI USA Index is the parent index of the index that ESGU seeks to track. The S&P 500 index is a commonly followed, broad market index. There may be material differences between the fund's index and the index shown including without limitation index provider, holdings, methodology and performance.

Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Performance data represents past performance and does not guarantee future results. Investment return and principal value will fluctuate with market conditions and may be lower or higher when you sell your shares. Current performance may differ from the performance shown. Click on the fund name below for most recent month-end performance, standardized performance, and the fund's index performance.

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