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October 9, 2020

ESG Investing: Aligning your portfolio with what’s important to you

Investment Committee

If you’ve been giving more thought lately to how your investments can align with your values, you’re not alone. An increasing number of people are participating in socially responsible investing, also known as Environmental, Social, and Governance (ESG) investing, as they desire to make a positive impact in the world.

ESG investing is based upon the identification and incorporation of factors designed to allow an investor to align their values with their investments. Examples include:

  • Environmental – climate change, pollution, waste, conservation, natural resources, water use, and biodiversity
  • Social – human rights, racial equity, health and safety, labor standards, community, and gender diversity
  • Governance – corporate governance, risk management, corporate behavior, and cyber security

In the past, even though investors wanted to support the values they care deeply about, the options were considered less impressive when compared to other investments. But that’s changing. The ESG investment landscape has evolved over the past several years, positively impacting the quality, performance, and the availability of low-cost investment options.

In our view, low-cost options are readily available and competitive with comparable non-ESG investment options. Thanks to innovation in the financial services industry and greater corporate transparency, investors can control the process more easily to align ethical decisions with investment returns that meet their own financial objectives.

JNBA’s Director of Investment Management David Webb and President Kim Brown recently discussed this shift toward ESG investing in a three-minute video.

Whether it’s a focus on human rights, the environment, gender diversity, or many other factors, ESG investing can help influence corporations in re-evaluating and adjusting business practices to better accommodate a wider variety of stakeholders. Because companies are now subject to greater scrutiny through the transparency of the internet, it’s much easier for investors to determine where organizations stand on the issues about which they care most. It’s also more likely that people will find out if a company is acting in an illegal or unethical manner. The companies that do subscribe to value-based operations are being rewarded; people are spending according to their values more than ever.

At JNBA, we’ve implemented a disciplined process to help our clients move into ESG investing if it’s something they’d like to explore. Our Investment Committee seeks out investments specifically targeting ESG-factors. Each mutual fund or ETF under review must have a dedicated screening process to either exclude certain investments or industries or to generally evaluate specific investments for favorable environmental, social, and governance characteristics or business practices. Each fund or ETF needs to adhere to a specific ESG-related benchmark and have reasonable assets under management or show positive asset flows.

The JNBA Investment Committee monitors the ESG investments and strategies on an ongoing basis, similar to our core strategy funds. While performing ongoing monitoring and research, JNBA reviews analyst reports, prospectuses, holdings, etc., to help ensure there is no deviation from the fund’s mandate. Whether a client is holding a portion of or their entire portfolio in ESG investments, JNBA monitors each portfolio on a 10-business-day cycle.

At JNBA Financial Advisors, we care about what you care about. We can help you align your values with your investments and welcome the opportunity to talk with you about a customized ESG approach.

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from JNBA Financial Advisors, LLC.

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