Sustainable investing.

Author:Frost, Calvin
Position:LETTERS FROM the Earth

Sally came to dinner the other evening. We don't see her as much now that Bob is gone. She lives north in the summer, south in the winter and west in between. Who knows where she is or when? It was kind of fun to semi-listen to her updates but when she began ranting and raving about the contamination in Lake Okeechobee in Florida my ears perked up. She ranted about water contamination, synthetic fertilizers, GMOs, and companies that don't have a corporate policy for ESG. Holy smoke, where was all this going? Trust me, I fixed another Boodles. But, Sally settled down and began to make sense and it really made me reflect on the significance of the "cost of consumption" and the responsibility that all companies have to their employees, their customers and vendors, and the community.

ESG, what does it mean? Do companies really espouse anything beyond a "money culture?" Isn't it always the almighty dollar that is king? Don't purchasing folks continually drive the price down? Isn't purchasing rewarded by lowering costs from year to year? Does it mean anything? So many questions. And what is fascinating is that I run into situations weekly that force companies to consider their ultimate goals. Is it money or ESG?

This was all articulated over the last several weeks in Barron's, a weekly financial tabloid. There were articles and editorials on the amount of money going into "sustainable mutual and exchange-traded funds." Many investors believe that investments that follow ESG (Environmental, Social, and Governance) principles have a greater return than those that don't. Obviously, this is arguable. However, for Barron's to devote an issue on the debate, the pros and cons, says to me that there are benefits to following ESG focus points. In fact, millennials are without question demonstrating strong interest in ESG investments. They are pressuring companies and investment firms to act and fuel the growth of investments, such as the Green Bond Market, according to Pimco, one of the world's premier fixed income investment companies. Morningstar, the well-known research firm based here in Chicago, has a Sustainable Investment Research department run by John Hale. Their research shows that "Inflows to the 275 ESG mutual funds and exchange-traded funds have averaged $708 million a month since Trump's election--three times the pace of the prior 12 months according to Morningstar. That has helped lift ESG assets in mutual funds and exchanged traded funds...

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