Sustainable Roth IRA Archives - EGÉA SRI

The Environmental Impact of Impact Investing

EGÉA SRI — Fri, 04 Oct 2024 15:23:43 +0000

Sustainable investing has been steadily gaining traction worldwide. A recent Morgan Stanley report highlights this trend, revealing that 77% of individual investors are interested in investing in companies or funds that aim to deliver market-rate financial returns while also generating positive social or environmental impact. Additionally, over half (57%) of these investors reported increased interest in sustainable investments over the past two years, and 54% plan to increase their allocations in the coming year.

Despite this growth, the report underscores concerns about greenwashing, with many investors citing a lack of transparency and trust in ESG data as potential barriers to sustainable investments. As more individuals consider directing their capital toward companies with strong sustainability practices, it’s essential to understand not just why sustainable investing is growing, but also how these investments can create tangible environmental impact. This month, we’ll dive into the key mechanisms and strategies that make sustainable investing truly effective.

Signaling Support through Portfolio Screening

Investors can create impact by strategically selecting the companies in their portfolios. Whether aiming to maximize risk-adjusted returns or align investments with personal values, the core idea behind this approach is to shift capital away from unsustainable companies and direct it toward those with strong sustainability practices. By doing so, investors signal their preference for businesses that demonstrate responsible governance and environmental stewardship, and help support those businesses and their positive impacts directly.

Engaging Shareholders to Drive Sustainability

Shareholders hold significant influence over companies, especially when they form coalitions or build strong relationships with corporate leadership. Research shows that shareholder engagement is more effective when shareholders collaborate, as it enables them to pool their power, legitimacy, and urgency. Direct actions, such as meetings, shareholder proposals, and voting, allow investors to advocate for companies to adopt more sustainable practices, making this an essential avenue through which sustainable investing can drive environmental change.

Prioritizing Metrics and Transparent Reporting

Peter Drucker’s well-known quote, “You can’t manage what you can’t measure,” is particularly relevant for sustainable investing. Monitoring companies’ progress in decarbonization and other sustainability goals is crucial for insulating portfolios against risks, such as regulatory changes and shifting consumer preferences. Investors should seek companies that prioritize transparent reporting and adherence to best practices in sustainability disclosures. Asking the right questions and focusing on measurable outcomes helps ensure that investments align with genuine sustainability goals.

Advocating for Stronger Regulatory Frameworks

Policy and regulation play a critical role in pushing companies toward sustainable practices. Investors can influence this process by providing insights to policymakers and advocating for regulations that promote corporate sustainability. For example, the U.S. Securities and Exchange Commission (SEC) recently introduced a rule requiring companies to disclose climate-related information in key filings. The SEC requirements will be phased in over several years and will replace inconsistent, voluntary reporting of climate risk exposure with clear and consistent standards. This shift from voluntary to mandatory reporting on governance, risk management, greenhouse gas emissions, and transition plans will help curb greenwashing and give investors more leverage to drive meaningful change.

How to Get Started

Navigating the complexities of ESG reports and distinguishing between genuine sustainable investments and greenwashing can be challenging. Partnering with a firm that specializes in sustainable, values-based investing can simplify the process and help avoid the confusion of corporate jargon.

At Egéa SRI, socially responsible investing is our core focus. We help individuals align their financial decisions with their values, offering customized funds that reflect specific goals—such as biodiversity-focused investments. Our team of chartered sustainable, responsible, and impact investing (SRI) counselors is dedicated to upholding the highest standards in SRI and ESG principles. Contact us today to learn how we can support your sustainable investment journey!

_{This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results. All investments involve the risk of potential investment losses, and no strategy can assure a profit. There is no guarantee that a company with a strong ESG score or one that focuses on sustainable investing will outperform a company with a lower score or without that focus in any given market environment.}

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Why ESG is Here to Stay

EGÉA SRI — Mon, 09 Sep 2024 14:53:32 +0000

The concept of Environmental, Social, and Governance (ESG) criteria has stirred significant debate, often polarized by differing views on climate change, social equity, and corporate accountability. Despite economic challenges and political opposition, a recent Teneo survey shows that 92% of CEOs are determined to continue their ESG efforts in 2024. This commitment is especially strong in regions new to ESG, like Latin America and Asia, where leaders are actively reprioritizing issues and engaging stakeholders. Europe remains the most resilient against ESG politicization, with many companies unaffected and setting high standards for global ESG compliance.

While some see ESG as a tool for social activism, experts assert that its true role lies in managing risks and fostering long-term business value – one of several reasons why we believe ESG is here to stay.

ESG as a Measure of Long-Term Business Health

ESG is increasingly recognized not as a moral judgment but as a critical tool for “managing material risk factors to ensure long-term value creation.” It adds an essential layer to investment analysis, providing insights into how a company handles crucial issues such as climate impact, pollution, labor practices, customer relations, supply chain management, and reputation—all of which can significantly affect a company’s bottom line.

Consider two companies in the same sector with similar revenue and expenditure, but with one key difference: one has high employee turnover and safety management concerns, and the other has high employee retention and strong safety measures. An investor would likely prefer the latter, reflecting how robust ESG practices are seen as indicative of better long-term investment potential. Similarly, a company proactive in reducing carbon emissions is generally viewed as a more secure investment compared to one neglecting these concerns. ESG factors are increasingly recognized as vital for assessing business risks and opportunities, impacting stock prices and overall enterprise value.

The financial markets have long recognized that financial metrics alone do not provide a complete picture of a company’s health. Investors are now more focused than ever on non-financial drivers—like ESG factors—that influence long-term value creation. Moreover, strong ESG performance can lead to opportunities for growth, cost reductions, risk minimization, higher employee engagement, and improved returns on investment, making companies more resilient and better positioned for long-term success.

ESG Standardization and Improvement

Momentum is building globally for more unified ESG reporting standards, with major strides toward standardization and clarity. The International Sustainability Standards Board (ISSB) is developing a comprehensive ESG reporting framework .to consolidate the numerous existing standards, aiming for more streamlined and consistent disclosures. This effort will likely lead to a shift from voluntary to mandatory ESG disclosure, particularly in regions lacking clear regulations.

As noted in our previous post on the top 5 U.S. ESG trends for 2024, the push for standardization and regulation is accelerating. In the U.S., where regulatory clarity is still evolving, ISSB’s sustainability standards are becoming increasingly vital for companies to meet growing investor and market demands. Emily Pierce, Chief Global Policy Officer at Persefoni and former SEC official, emphasizes that “investor and commercial expectations for information are here to stay, and regulations in other jurisdictions will accelerate the pressure on U.S. companies to keep up.”

Notably, the European Union’s Corporate Sustainability Reporting Directive (CSRD), introduced in 2022, represents the most extensive sustainability disclosure legislation globally. It aims to improve the quality and comparability of non-financial data, aligning ESG reporting more closely with traditional financial standards. As these universal reporting standards take effect, companies will face increased pressure to adopt practices that not only benefit society but also enhance profitability.

Global Embrace of ESG by Investors and Executives

Recent trends indicate that ESG funds are not only holding their ground but are often outperforming traditional funds. Our earlier analysis of Morgan Stanley’s 2023 report highlighted that, over the past five years, sustainable investments have consistently matched or exceeded the returns of conventional funds.

This growing recognition of ESG’s financial benefits is reflected in the enthusiasm of investors and executives worldwide. A recent Bloomberg survey of 500 executives and investors from the U.S., Europe, and Asia-Pacific reveals that 89% view ESG metrics as mainstream, and 57% believe the “ESG” label remains relevant. Bloomberg’s research further shows that ESG is seen as a key driver of profitability, competitiveness, and brand value, with 85% of investors agreeing that it leads to better returns, more resilient portfolios, and enhanced fundamental analysis. This trend underscores that ESG is not merely a passing trend but a crucial element for long-term business success.

With ESG principles now central to both investment success and corporate strategy, it’s evident that ESG is here to stay.

At EGÉA SRI, we specialize in helping individuals invest responsibly, tailoring investments to our customers’ values. Contact us today for a consultation and let us help you grow your portfolio sustainably!

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How to Find a Chicago Sustainable Investing Group

EGÉA SRI — Fri, 16 Dec 2022 21:01:41 +0000

Do you want to know how to find a Chicago sustainable investing group? For many investors, where and how their money is invested matters just as much as how much they earn from their investments. They want to invest in groups that share the same values.

As the earth’s temperature and sea levels rise, the Earth’s longevity is jeopardized. Social justice issues abound, making life difficult for people just trying to make a living. It makes sense that you would want to do something to support counteracting these issues for a more sustainable world. In this article, you will learn about sustainable investing companies. You will learn how to find a Chicago sustainable investing group and how to choose the sustainable investing firm that is right for you.

Sustainable Investing Companies

Before you learn how to find a Chicago sustainable investing firm, you need to understand what investment firms are. Investing firms hold and manage capital for a variety of clients, both individuals and business entities. Sustainable investing companies are simply investment companies that focus on helping their clients manage investments into a socially responsible portfolio in their Roth IRAs, Traditional IRAs, and Investment accounts.

How to Sustainably Invest

When deciding where to invest your money, sustainable investing takes more into account than the bottom line. Learning how to find a Chicago Sustainable investing group begins by learning about the aspects of sustainable investing. Those who use sustainable investment companies look into the prospective investment’s contribution to society. For example, someone interested in sustainable investing might choose to invest in a company that pays their workers a living wage and offers proper working conditions over a company that might make more money but also has been proven to cause severe ecological damage. A sustainable investor looks at businesses as a whole rather than just at their profits.

Environmental, Social, and Corporate Governance (ESG)

Environmental, social, and corporate governance (ESG) insights can help you make informed, sustainable investing decisions. You should keep these in mind as you learn how to find a sustainable investing group.

Environmental refers to a company’s impact on the environment. This includes things like climate change, deforestation, endangered wildlife, natural resource protection, and more. Perhaps a company takes special care to reduce its emissions or pays a bit more to use sustainable energy. This company would be a sustainable investment. On the other hand, perhaps a company chooses to use a dwindling resource when they have other options or contribute to deforestation, or produces significant emissions with no sign of trying to reduce their environmental impact. This is a company that would not be a sustainable option.

Social refers to a company’s impact on various social issues. This includes things like child labor, gender equality, racial equality, fair pay, safe working conditions, and more. A business that takes care of its employees with more than fair pay and an emphasis on safety conditions would be a sustainable investment. A company that is known to discriminate against women and minorities, and use suppliers that use child labor would not be a sustainable investment.

Governance refers to how a company’s management works to drive positive change. Is their board of directors diverse both racially and gender-wise? How transparent are they? A company’s actions are more important than its words. A company may say they are environmentally friendly when in reality they are overstating its contribution and green-washing.

ESG can help guide you to the right investment opportunities. You can decide what is important to you within each of these insight categories and use that to choose your investments. There are two tactics you can use to narrow down your choices. You can either exclude investment opportunities based on the criteria you chose earlier or pick the investment opportunity that hits the most criteria.

If you want to create social change or combat climate change and other ecological issues while also earning a return on your investment, sustainable investing companies can help. Now that you know what sustainable investing companies are and what sustainable investing is, you are probably wondering how to find a Chicago sustainable investing group.

Chicago Sustainable Investing

In Chicago, there are many investing firms to choose from, each with its own strengths and weaknesses. When you are ready to learn how to find a Chicago sustainable investing group, be sure to screen potential groups. If you want to find the best Chicago sustainable investing group for you, there are some things to look out for.

Identify Your Investing Goals

What do you want to get out of your investing journey? Is your goal to only make money or do you also want to support companies that do good for the world? Considering your reading this article, chances are you care that your investments support companies doing good things for the world.

Research

Take some time to research multiple Chicago sustainable investing groups. Use search engines, talk to friends and family, and look through reviews. Find as much information as you can to compare different investing groups against each other. The more information you have, the more certain you can be that you can make the correct decision.

Ask Questions

When you find an investment company you would like to work with, prepare some questions. Ask about their experience. Ask what licenses they hold and if they are registered with the SEC or FINRA. Ask questions about how they will handle your portfolio and how much it will cost you. If you have any concerns, be sure to address them. The way the potential investment firm answers your questions will let you know if you want to work with them.

SRI in Chicago

SRI, or socially responsible investing, in Chicago does not need to be hard. Learning how to find a Chicago sustainable investing group is easy when you have a group like EGÉA SRI.

EGÉA SRI can help you understand sustainable investing and put you on the right track.

Our Chartered SRI Counselors can help you make a difference with your investment portfolio.

We create and manage sustainable investment portfolios. We can help you maximize your 401k, help with wealth planning, charitable giving, trust, and estate services, and much more. We understand the importance of investing in entities whose actions match your values. Profit and sustainability can go hand in hand when you invest with EGÉA SRI.

Disclosure:

A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.

Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

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How to Ensure Your Retirement Funds are Both Safe and Sustainable

EGÉA SRI — Thu, 15 Sep 2022 19:55:29 +0000

Is your retirement account invested sustainably? As a consumer who prioritizes sustainability, chances are you make daily choices to help the environment, like cutting down on your water use and buying eco-friendly products. But have you considered how your savings can make a difference, too? That’s right: your money can impact the environment, even when it’s not in use. If you want to learn how to ensure your retirement fund is both safe and sustainable, EGÉA SRI can help.

How to Ensure Your Retirement Funds are Both Safe and Sustainable

Many individuals simply create a retirement account and then don’t pay it much thought. But if you are mindful of the environment, it’s worth going back to take a look and see what your 401(k) or other account is actually invested in. You might not know it, but your 401(k) might be invested in companies that are contributing to global harm — companies that you wouldn’t consider investing your hard-earned money in. Instead, you can create a sustainable 401(k) and invest in brands that are actively working to combat climate change. More and more pension funds are moving forward with ESG investing, and you can too.

Why It Is Important to Ensure Your Retirement Accounts are Both Safe and Sustainable

Taking a look at the safety and sustainability of your retirement accounts isn’t just good for the environment. It can also be good for your future retired self’s wallet. It can actually be better for the health of your account to invest sustainably. The energy sector has performed poorly over the last decade as ESG investing is on the rise, and the new Biden administration is prioritizing its commitments to a clean energy revolution and environmental justice. A sustainable retirement fund can perform as well or better than traditional retirement funds.

How Do I Go About Creating a Safe and Sustainable Retirement Investing Strategy?

These are a few ways you can craft your sustainable retirement investing strategy:

Make Your 401(k) Sustainable

One way to ensure your retirement fund is both safe and sustainable is by making your 401(k) sustainable. If you are unsure how to start investing sustainably, a firm known for sustainable investing like EGÉA SRI can help.

Choose a Sustainable Roth IRA

A sustainable Roth IRA is an investment strategy that seeks to maximize financial returns, while also supporting an idea, belief, or cause that is important to the individual investor.

How to Build a Sustainable Retirement Portfolio

These are the steps for how to ensure your retirement fund is both safe and sustainable:

Find Out Where Your Money is Going

There are many retirement account options available. It is most likely that your retirement fund is either an employer-sponsored retirement account like a 401(k) or a 403(b). Or, you might have an individual savings account, like an IRA to Roth IRA. Or, if you are self-employed, you might have a solo 401(k). For employer-sponsored accounts, investment options are usually either mutual funds or equity shares. Your employer sets the limits and details of your plan, including which types of funds you can invest in. However, if you have an individual retirement account (often referred to as an IRA), you have much more choice in what you invest in. No matter which type of retirement account you have, you should be able to find out where your money is going and track its environmental impact.

Learn About Your Retirement Fund Options

Even if you do have an employee-sponsored fund like a 401(k), you still have options. Once you determine how much you are going to contribute to your fund, your employer or the financial institution that manages your account should give you a range of stocks and bond funds to choose from. If you want to learn more about your options, contact your company’s 401(k) advisor or HR department. Specifically, you can ask if they offer options like ESG funds. ESG is an acronym that stands for environmental, social, and governance factors.

Choose Objectives That Align with Your Morals and Values

As an investor, you have the power to choose investments (including for your retirement fund) that align with your values. Determine your objectives as an investor and use them to either have a conversation with your employer’s retirement plan or to create a personal retirement investment plan. One way to make your retirement fund more intentional is to choose to either positively screen or negatively screen your investments. A positive screen includes funds that align with your values. For example, you might want to invest in clean water initiatives or alternative energy sources. A negative screen excludes companies that do not align with your values or meet ESG standards.

Do Your Research

Once you know what your retirement fund options offers are and what your goals are for your investments, it’s time to make decisions.

Check-In Frequently

Don’t just set your retirement fund and forget it. Be sure to check in on your fund and your investments and adjust accordingly.

How to Determine the Best Green Companies to Invest In

When you are ensuring your retirement fund is sustainable, it’s important to avoid companies that are greenwashing. Greenwashing is when companies purport to be green, when their practices might not in fact be all that sustainable. The best way to find the best green companies to invest in is to ensure that they focus on reusing or renewing, encourage fair trade and safety, and take care of the environment. An experienced sustainable investing firm like EGÉA SRI knows how to spot greenwashing and find the best green companies to invest in that align with your own personal values. The best green company for you to invest in might differ from another investor’s.

Ensure Your Retirement Fund is Both Safe and Sustainable with EGÉA SRI

If you want to ensure your retirement fund is both safe and sustainable, it’s time to open a retirement fund with us at EGÉA SRI. We create and manage sustainable ESG portfolios, including for your retirement. Contact us today to start your own safe and sustainable retirement fund for your future and the planet.

Disclosure:

Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria exclude securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

The post How to Ensure Your Retirement Funds are Both Safe and Sustainable appeared first on EGÉA SRI.

Best Sustainable Roth IRAs

EGÉA SRI — Fri, 01 Apr 2022 16:40:16 +0000

What is a Sustainable Roth IRA?

Finding a sustainable Roth IRA is an investment strategy that seeks to maximize financial return while simultaneously advancing an idea, belief or cause that is important to the individual investor, through the use of ESG. ESG stands for Environmental, Social and is the criteria that is used to screen sustainable investments that can be used in a Roth IRA.

What is a Roth IRA?

A Roth IRA, or a Roth individual retirement account, is a type of investment account that permits tax-free withdrawals so long as certain criteria are met. Funds can be added to these accounts post-tax, thus the contributions are not tax-deductible. However, this also means that withdrawals are tax-free. The benefit of a Roth IRA, in particular, is that it can aid your financial situation should your marginal taxes be higher in retirement than they are prior to that time.

There are some limitations to a Roth IRA. Namely, filers can only contribute if their annual income is below a certain amount. As of 2022, this amount is $144,000 for single filers and $214,000 for married couples filing jointly. The current contribution limit is $6,000 before retirement and $7,000 post-retirement. Yet, as individuals investigate the benefits of a Roth IRA, they may question where their money is going. Therefore, many have turned to SRI.

What is SRI?

In any case, an individual’s retirement funds are being invested in a variety of companies. So, many believe that the companies they fund should have values and ideals matching their own. This is the basis of SRI. SRI is socially responsible investing. SRI has become more and more popular, with reports showing that SRI assets have increased approximately 40% year-over-year since 2016.

Depending on the investor’s profile, this could look drastically different from one person to the next. For one individual, this could be represented in the avoidance of funding gun manufacturers. Another may have a strong preference for supporting companies that in turn support LGBTQIA+ rights. And a third may want to ensure their money is funding companies that align with their religious beliefs.

Socially Responsible Investing and ESG

One newer method of approaching socially responsible investing for investment firms by creating teams to investigate ESG standards. ESG stands for environment, social, and governance. The benefit of ESG standards is that they help to standardize the evaluation of a company’s impact with a more objective view than other SRI methods. This criteria rates a company’s social impact by evaluating the following:

Environmental Impact

What is the company’s carbon footprint? Are they associated with the fossil fuel industry? Do they utilize toxic chemicals in manufacturing? How much waste do they produce? There are plenty of questions to consider when evaluating how a company interacts with our environment.

Social Impact

This criterion evaluates impact both within the company. However, it also acknowledges how the company interacts with the broader community. This can include everything from hiring practices to inclusion programs. Does the staffing show diversity in gender, race, and LGBTQIA+ identities? Is this diversity shown in both overall staffing and the executive suite?

And looking on a more macular level, does the company have a corporate responsibility team to evaluate their social impact? How does the company advocate for societal change? Social impact can be one of the hardest to evaluate because different individuals are bound to have varying opinions on what positive social change looks like.

Governance

Similar to social impact, governance evaluates how a company’s board of directors or upper management pushes for positive change. This can include how leadership responds to criticism from the public and internal stakeholders. It can include pay equity as well. Governance includes anything that shows how those in positions of power relate to their staff and their shareholders.

ESG Scores

Environmental, social, and governance scores are typically rated on a 100-point scale, with 100 being an ideal rating. However, this score may vary depending on the evaluating organization. Different investment firms tend to analyze companies using distinct metrics and algorithms. This tends to be the largest concern when it comes to ESG. It is important to find an investment firm you trust to evaluate where you invest your funds.

Ethical Investing Companies

Why do we need ethical investing companies? Well, it can be difficult to understand the complexities of the financial world. It takes time to develop the knowledge of a company’s impact, making socially responsible investing potentially daunting for those with a busy lifestyle. Many investment firms have thought about this burden on their clients and acted to ease this stress.

Companies like EGÉA SRI have chartered SRI counselors with foundational knowledge of the history, definitions, trends, portfolio construction principles, fiduciary responsibilities, and best practices for socially responsible investments. In doing so, investment firms can be seen as ethical investing companies. They do not just care about the money you invest. Rather, ethical investing companies seek to understand the values of their clients and serve them to the best of their ability.

Balancing Your IRA

In order to responsibly balance your IRA, you have to look at both the financial and social impact of investing. But as noted above, you do not have to do this alone. When evaluating an investment firm to choose for your Roth IRA, make sure you read about the values of the establishment. Then, let them help take the burden off of your shoulders. Many firms have ETF screeners or SRI counselors to help investors find and compare SRI funds.

If you are looking to find the best sustainable Roth IRA, you can request a free consultation with EGÉA SRI. Once you’ve signed up for a consultation, a member of their team will be in touch to collect more information and walk you through the next steps. Your consultant will listen diligently to your investing goals, preferences, and values and they will aid you in your mission to invest more responsibly! Their Chartered SRI Counselors will help you make a positive difference.

Disclosure:

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