SMART Investing Services
for Individuals

SMART Investing Services for Individuals

SMART (Sustainability Metrics Applied to Risk Tolerance) ®

ESG: The GPS of Investing™

Twenty years ago, if you were driving from one destination to another, you might use a large fold-out map to chart your course. Over the past several years, these maps have become obsolete, as more data lives in our GPS systems than 10,000 maps could possibly provide. Currently, we even have access to live data feeds that alert us to traffic and other potential hazards so that we may reach our destination as quickly and safely as possible.

Similarly, the only data available to us twenty years ago to help evaluate stock performance were public financial statements. Like the fold-out maps of old, these statements give us only a part of the data now available when evaluating the investment potential of a company. 

Recent studies show that financial statements and reports on tangible assets represent about 13% of a company’s valuation.1  What then accounts for the other 87%?  Welcome to the world of ESG, or Environmental, Social, and Governance Investing.

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Climate impact and greenhouse gas (GHC) emissions, energy efficiency, air and water pollution, water scarcity, biodiversity, and site restoration.

Human rights, local community impact and employment, child labour, working conditions, health and safety, and anti-corruption.

Alignment of interests, executive compensation, board independence and composition, and other shareholder rights.

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Since 2015, studies show that ESG outperformance opportunities exist in many areas of the market. Recent findings from more than 2,200 unique primary studies show that there is clear material evidence for the business case of ESG investing.3

SMART Investing Services for Individuals act like your car’s GPS system to capture and filter through ESG data that is now available to investors. Recent advances in technology make it possible to utilize millions of data points to screen for the best companies across multiple industries. ESG metrics capture this data and allow investors to see what is imperative to stock performance, allowing them to make decisions in real time.

ESG analysis is the starting point and foundation of SMART Investing Services for Individuals, but upon a client’s request, we can also add Socially Responsible (SRI) and Impact Investing metrics. To understand the difference between these three types of investing, please see below:

ESG Investing

ESG Investing is the integration of environmental, social, and governance factors into the fundamental investment process. Regardless of a client’s level of interest in a values-based approach, investing without ESG data is like driving without using your GPS. ESG is the foundation of a good portfolio because it helps avoid potential pitfalls and hazards of intangible asset risk.

SRI Investing

Socially Responsible Investing is the screening in or out of specific companies and/or industries that align with a client’s values. Once we’ve filtered for ESG metrics, we can then layer in a values-driven investment approach in accordance with a client’s wishes. Possible screens include fossil-free, education, gender lens, climate change, aging population, health care, and more.

SMART Investing Services for Individuals

SMART Investing Services for Individuals is an investment into a company with the intention of generating a measurable environmental and/or social impact alongside a financial return. For clients with an interest in having a measured impact on environmental and/or social issues, we offer a variety of private and alternative options and are continually evaluating the investment potential of others.

If you would like to learn more about our SMART Investing Services for Individuals, please contact us for a free consultation.

UN PRI

Gitterman Wealth Management is a signatory to The United Nations-supported Principles for Responsible Investment (PRI) Initiative, an international network of investors working together to put the six Principles for Responsible Investment into practice.  Its goal is to understand the implications of sustainability for investors and support signatories to incorporate these issues into their own investment decision-making and ownership practices.  In implementing the Principles, signatories contribute to the development of a more sustainable global financial system.

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Planetary

Jeff Gitterman is also an Associate Producer of the feature documentary film PLANETARY, in partnership with VIMEO, Reconsider Films, and Planetary Collective.

References

[1] 16 Ocean Tomo, Backgrounder on Ocean Tomo 300® Patent Index (OT300):  www. oceantomo.com/productsandservices/investments/indexes/ot 300

[2] http://www.cppib.com/en/how-we-invest/sustainable-investing/integrating-esg/

[3] Gunnar Friede, Timo Busch & Alexander Bassen (2015) ESG and financial performance: aggregated evidence from more than 2000 empirical studies, Journal of Sustainable Finance & Investment, 5:4, 210-233, DOI: 10.1080/20430795.2015.1118917

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