As a long-time champion of ESG investing, Hallie Kraus, Private Wealth Advisor at Treehouse Wealth Advisors, was recently interviewed by Senior Contributor Larry Light at Forbes to discuss The Case For ESG Investing.
Hallie explained that commonly referred to as impact investing, the acronym ESG stands for environmental, social, and governance, with the goal for investors who wish to make money while simultaneously supporting companies that do good. The shift towards this type of investing reflects an increasing change in societal attitudes towards environmental and social responsibility.
To provide more context, Kraus expands on the key questions behind what defines a company to make it fall within the ESG category. This includes a wide range of answers about environmental sustainability practices that could cover everything from water and land use practices to renewable energy and whether climate change will affect the company’s future. Social responsibility practices are focused on how the company treats its stakeholders, including employees, customers, suppliers, and society. While governance looks at the diversity of a board of directors and management team and how the company is run.
Light asks about the effectiveness of ESG investing. Hallie points out that in 2015, Deutsche Asset Management and Hamburg University conducted a comprehensive meta-analysis on ESG investing and found that the majority reported a positive relationship between ESG and corporate financial performance. ESG funds are becoming seen as an opportunity. Kraus concluded by reminding Light that ESG investing and how we approach making a difference with our money is constantly evolving and that the takeaway from the 2020 pandemic was the power of collection action can lead to change.
Treehouse Wealth Advisors is a fee-only wealth management firm based in the San Francisco Bay Area, serving innovators, legacy builders, and impact makers. The firm provides personalized financial planning, investment management, and wealth advisory services, helping clients navigate significant life changes while working toward fulfilling and meaningful lives.
