Some of our clients are quite specific about their socially responsible investing objectives – often this is to request a portfolio of investments that is 100% socially responsible. Sometimes a client may request no socially responsible investments, though this is relatively rare. Most of our clients, however, look to us for some guidance on how to incorporate socially responsible investments within their portfolio. In these instances, we will incorporate socially responsible investment options wherever we think they have a reasonable probability of performing as well as non-socially responsible alternatives. The good news, for socially responsible investors, is that over the last several years we are finding a rapidly expanding pool of excellent socially responsible investment options.

When we at Lamplighters use the terms “sustainable” or “socially responsible” we are ultimately referring to ESG investing. ESG investing goes beyond the traditional “toolbox” to select investments in that ESG also places weight on a company’s practices within the environmental (E), social (S), and governance (G) arenas. For example if companies lacked a plan to reduce carbon emissions, had poor relations with employees, or operated with a board of directors that lacked diversity (or perhaps tolerated too many conflicts of interest) then these companies would likely score poorly on ESG criteria.

ESG investing is not just about “scoring” a company on certain socially responsible factors but is often also about engaging with company leadership to encourage them to take a more sustainable or responsible path. Yes, ESG investors can ultimately drive a change in behavior of some corporations. The wonderful thing about ESG investing is that the outcomes ESG investors seek are intended to also improve the long-term bottom-line at the company in question. There is never any guarantee that the results of ESG activism will boost profits and enhance shareholder value, but there is increasing evidence that this is often the case.