In recent years, Environmental, Social, and Governance (ESG) investing has transitioned from a niche interest to a mainstream financial trend, capturing the attention of investors worldwide. But what exactly is ESG investing, and how does it differ from traditional investment strategies?
How can fiduciary investment advisors help determine if ESG investing aligns with your financial goals, practices, and beliefs?
At Global View Investment Advisors, our commitment as fiduciary advisors in Greenville, SC, is to offer transparent, fee-only guidance tailored to your unique financial journey. In this blog we will lay out the facts of ESG investing. Currently, we do not subscribe to this type of investing because of the distortion of the facts, high fees, and influences that derail the fiduciary responsibility to the shareholders.
What is ESG Investing?
ESG investing began gaining significant traction in the early 2000s when the idea was formed that investors should prioritize not only their financial returns but also the impact of their investments on environmental, social, and governance factors.
The concept around ESG investing is simple: it’s a way to invest in businesses that say they are taking care of our planet and the people living on it and whether these businesses are run fairly and responsibly. The ESG guidelines include several factors.
When we talk about a company being friendly to the environment, it means they're doing their part by cutting down on pollution, using green energy, working in eco-friendly buildings, minimizing waste, creating environmentally safe technology, and supporting green causes.
A company shows it cares by paying fair wages, taking responsibility for its products, safeguarding your personal information, and ensuring the workplace is healthy and safe for everyone.
Governance is all about how a company is run. They must be open about who owns and controls the business, celebrate diversity, have an independent board to make unbiased decisions, be transparent about their finances, and stick to high ethical standards.
Watch Joe Hines and Matt Crider discuss why this time is different.
Greenwashing
As ESG investing has gained traction, so has the development of ESG mutual funds and ESG ETFs (Exchange Traded Funds). These funds make it easy for investors to invest with a focus on ESG-compatible initiatives.
Many Wall Street firms quickly gave existing mutual funds a “green makeover” without changing much of underlying investments and principles. Some refer to this as "greenwashing" – that's when things are made to look more eco-friendly than they are. The SEC has created a special team to check out sustainability claims, with a keen eye on ESG.
Greenwashing might sound eco-friendly, but it's a sneaky tactic some companies use to appear more environmentally friendly than they are. Imagine a company bragging about how "green" their products are, but they're not doing much for the planet. It's like they're dressing up their products in eco-friendly costumes without making any real commitment to our quality of life on this planet.
So, look closer next time you see a product or company claiming to be super green. Knowing when a company is genuinely eco-conscious or just trying to win over eco-minded investors with clever marketing is an important distinction.
Is ESG Sustainable?
The buzz around ESG investing has taken the financial world by storm, creating an odd situation. ESG has ballooned into a whopping $35 trillion market, and now, those who have served as its champions find themselves in the uncomfortable spot of having to prove it was all worth it after the fact.
Lately, there's been some pushback. Critics argue that ESG principles could harm local businesses, offer weaker financial returns, and disrupt the traditional investor-management dynamic. The game's rules are still being figured out, with standards and data all over the place, leading to a lot of head-scratching over the real impact of ESG.
A core question is whether ESG investing reshapes core American values without public consent.
The broader implications of ESG for society can be concerning. ESG offers a backdoor for activists to influence policy without going through the democratic process, potentially bypassing public opinion and legislative scrutiny.
ESG is also very lucrative. Mutual funds focused on ESG can charge significantly higher fees than traditional funds. With the global value of ESG assets in the trillions, it's clear who benefits from these higher charges.
It's a stark example of how corporate decisions, influenced by major ESG investors, can override broader economic and practical considerations.
Why rely on government mandates when corporations, driven by ESG principles, can enact significant changes? Corporate boardrooms are new arenas for policy-making, from health policies to energy strategies.
The Global View Investment Approach
Our journey began within the high-pressure environment of a Wall Street firm, where the daily grind was more about hitting financial targets for the corporate boards than focusing on what truly matters: helping our clients achieve their aspirations.
The relentless push to prioritize profits over people and to compromise on offering top-tier investment options didn't sit right with us. We knew there was a better path, so we took a leap of faith and founded Global View.
Here at Global View Investment Advisors, we've flipped the script. As a fee-only, fiduciary firm, our role is to advise, not to sell. Our independence from selling investment products means our only agenda is finding what works best for our clients, putting their interests at the forefront every single time.
This approach isn't just talk; it's a commitment to grow together, building a prosperous future for clients and future generations of their families.
We practice what we preach, investing our assets alongside you.
This "skin in the game" philosophy might be rare in the industry, but it's a testament to our dedication to aligning our success with yours, ensuring mutual trust and confidence.
Since we started, we've been by our client's side, helping them refine their financial goals and stay steady through the ups and downs of the securities markets. We leverage our global market experience to aim for a blend of diversity and stability in your investments.
The world of financial services can often feel like a maze designed to confuse and complicate, a phenomenon we like to call a confusopoly. Wall Street is the biggest maze, thriving on keeping you in the dark while it prospers.
We think differently. Transparency is a key business principle because we believe in eliminating those unwelcome surprises nobody likes or wants. It's all about working hand in hand to clear the fog.
We understand that the intricacies of finance might not be everyone's cup of tea, and that's okay. What matters is that you have enough clarity and confidence to feel good about our direction together. That's our promise to you.
Connect with us to learn more about our long-term investing strategies.
