“Sustainable” investing covers a broad spectrum of investment opportunities from simply considering environmental, social, and governance criteria when making investment decisions to highly focused, thematic impact investing strategies.
At Saturna Capital, we view the consideration of ESG factors as essential to identifying opportunities and forming portfolios of high-quality companies better positioned to reduce risk. We believe that a thorough review of how a company addresses ESG issues provides an important indication of how that company will perform over time.
On this page:
Overview United Nations
Sustainable Development Goals Sustainable Investment Process For Advisers
For decades, socially responsible investing was considered niche and suffered from a reputation of delivering lower returns to investors than traditional investments. As more investors have demanded transparency from the companies in which they invest, however, more data has become available for investors to use when making investment decisions. This data covers a wide variety of issues in the area of environmental impact, social impact, and corporate governance — or “ESG” for short.
The ESG data that investment professionals reference in the investment analysis process has allowed what was traditionally known as socially responsible investing to evolve past negative screening strategies — which sought to merely screen out undesirable investments in industries such as tobacco, firearms, and fossil fuels — to a positive screening approach where investments are selected based on relative good performance on ESG issues.
That means that today’s sustainable or ESG investments are able to not only screen out the bad, but to actively seek out the good by investing in companies that are strong performers on everything from decreasing greenhouse gas emissions, to safety protocols for employees, to how many women and people of color are on their board of directors. The factors each investment manager will look at may be slightly different, but the goal is the same: to do well (financially) while doing good (ethically).
Explainer Video: What is ESG Investing?
Have you heard about sustainable or ESG investing and wondered if it is right for you?
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United Nations Sustainable Development Goals
The Global Goals for Sustainable Development (SDGs), officially known as “Transforming Our World: the 2030 Agenda for Sustainable Development,” consist of 17 goals and 169 targets that were created to end poverty, promote prosperity and well-being for all, and protect the planet. The SDGs set a course and framework to achieve these objectives. According to the United Nations Conference on Trade and Development, achieving these goals will require investment as high as $7 trillion, with an investment gap in developing countries of about $2.5 trillion.1 However, achieving these goals could open up $12 trillion of market opportunities in food and agriculture, cities, energy and materials, and health and well-being, while creating 380 million new jobs by 2030.2 The goals offer a compelling growth strategy for business and the world economy; however, the SDGs also need business to seize opportunities and advance progress.
The SDGs have gained broad support since their launch, with foundations across the globe having contributed more than $50 billion toward achieving the goals.3 Additionally, companies are incorporating the SDGs as a means of mitigating environmental, social, and governance (ESG) risks as part of their overarching business strategy. For example, 40% of the world’s largest companies currently discuss the SDGs in their corporate reporting.4,5 Identifying good corporate governance – as demonstrated by excellent transparency, risk awareness, and positioning to take advantage of these coming opportunities – could be a major driver of long-term value for investors. Sustainability and performance in a portfolio work together under the framework of the Global Goals.
For more information about how Saturna addresses and contributes to the SDGs, please see the following resources:
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Read online:From The Yardarm: What Are The SDGs
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Read online:Saturna Sustainable Funds Impact Report
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Sustainable Investment Process
The Saturna Sustainable Funds seek to invest in sustainable and responsible issuers. The Funds’ adviser, Saturna Capital, believes that companies proactively managing business risks relating to environmental, social, and governance (ESG) issues make better contributions to the global economy and are more resilient. By using a combination of negative and positive screening, along with financial analysis and an emphasis on low debt, the Funds seek issuers who outperform their peers on a variety of ESG factors.
Read more about our Saturna Sustainable Funds investment process or our full Saturna Capital investment philosophy:
Saturna is dedicated to showing industry leadership by providing sound educational opportunities and materials – particularly in the area of sustainable investing. For advisers who are interested in, but new to, sustainable investing, we offer the following white papers and tools:
1 Niculescu, Mara. Impact Investment to Close the SDG Funding Gap, June 13, 2017. http://www.undp.org/content/undp/en/home/blog/2017/7/13/What-kind-of-blender-do-we-need-to-finance-the-SDGs-.html
2 Business and Sustainable Development Commission. Better Business Better World, January 2017. http://report.businesscommission.org/uploads/BetterBiz-BetterWorld_170215_012417.pdf
3 Ekram, Arif and Bradford, Lauren. Foundations Have Invested $50 Billion in the SDGs, But Who’s Counting? http://sdgfunders.org/blog/foundations-have-invested-50-billion-in-the-sdgs-but-whos-counting/lang/en/
4 Blasco, J.L., King, A., Jayaram, S. How to Report on the SDGs: What Good Looks Like and Why It Matters, February 2018. https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2018/02/how-to-report-on-sdgs.pdf
5 Schatz, Roland. SDG Commitment Report 100: Tracking Companies’ Efforts to Contribute to the Sustainable Development Goals. https://www.cbd.int/financial/2017docs/un2017-scr100.pdf