Sustainable Investing

Envision Wealth Planning uses several sources to screen companies for sustainable investing: YourStake. As You Sow, and Morningstar Sustainability Ratings. As You Sow is a publicly available resource, and YourStake and Morningstar Sustainability Ratings require a paid subscription. 

We do this to help overcome the recent greenwashing problem. An investment company may simply add a descriptor, such as Green S & P 500, indicating it has been screened. Under further examination, it may not appear to have been screened at all. 

Jon Hale, Head of Morningstar’s Sustainability Research, has found that some companies with no descriptor may be more values-based than another. This may be due in part to the fact that their process of screening companies for inclusion in their fund includes screening out companies with practices that may be detrimental to their shareholders.

We believe that having multiple sources of research, in addition to engaging with our investment providers, is the wise approach to getting it right for our clients.

As You Sow

As You Sow is a great resource if you are trying to evaluate your own investment, say in your 401(k) or 403(b) employer sponsored plan. It also allows you to focus on multiple issues, such as Women’s Empowerment, Private Prisons and Deforestation. Clicking the graphic will take you to their website, where you can screen for topics such as Prison Free, Fossil Free, and Gender Equality Funds.

Our own James Brewer, a Personal Finance Contributor for Forbes, used As You Sow’s ratings for his Forbes.com articles:

Are You Unknowingly Investing In Private Prisons?

Can Women Actually Retire Successfully by Investing in Gender Equality?

Do You Want To Retire By Investing Deforestation Free?

Do You Want To Retire Investing Fossil Fuel Free?

YourStake Sustainable Investing Screening

YourStake has been ranked #1 again for SRI/ESG Portfolio Analysis Services in the 2022 T3/Inside Information Advisor Software Survey. [SRI/ESG stands for socially responsible investing/environmental social and governance.] YourStake helps us understand our client/prospect values by utilizing a Behavioral Values Questionnaire. This is a first step to see if our sustainable investing approach fits our clients’ needs.

Many of our clients are in some combination of Women Empowerer, Planet Protector and Racial Equity Advocate. The Envision Justice Series™ Portfolios Core incorporates these values into our investment selection. YourStake’s platform provides transparent and objective raw data from over 200 sources.

Their questionnaire, paired with tangible, personalized, impact outcomes, helps clients invest in portfolios that better align with their values, and allows us to explain impact reports that highlight the outcomes achieved by ESG investments. The following shows a sampling of their reports.

Morningstar Sustainability Ratings

The Morningstar Sustainability Rating allows us to see how approximately 20,000 mutual funds and exchange-traded funds (ETFs) look under Morningstar’s sustainable investing lens.

The ratings measure the degree to which a company’s economic value (enterprise value) is at risk driven by environmental, social, and corporate governance factors or, more technically speaking, the magnitude of a company’s unmanaged ESG (environmental, social and governance) risks.

The rating was created to provide investors with a signal that reflects (to what degree) their investments (single assets or portfolios) are exposed to ESG risks that are not sufficiently managed by companies.

For each fund eligible for a Morningstar Sustainability Rating, the rating is expressed as 1 to 5 “globes,” whereby a higher number of globes indicates the portfolio has lower ESG Risk. Notably, the number of globes a fund receives is determined relative to other funds in the same Morningstar Global Category.

This means a fund could have more ESG risk than another fund, yet still receive a better rating if those funds are in different global categories, with their own unique qualification of what is a relatively low or relatively high amount of ESG risk.

To simplify, companies are assessed a Globe rating from 1 to 5, with 5 meaning the highest. This chart shows that a mutual fund that falls just short of the top 10%, say 11%, receives a 4 Globe rating, but so does the one that scores at the 32%.

Are you ready to set up a meeting to learn more? Book a 30 minute Discovery meeting.

How well aligned to your values is your portfolio?
See if you qualify for our complimentary values-based portfolio analysis here.