A recent study reveals that millennials and women are driving demand for sustainable investing—putting their money to work in a socially responsible way. Ann Hynek talks to Deborah Winshel, BlackRock’s Global Head of Impact Investing, to learn more about this growing trend.
When discussing how to invest like a millennial, I mentioned that social responsibility is a key factor when making investment decisions. A study from Morgan Stanley’s Institute for Sustainable Investing supports this claim, finding that millennials are two times more likely to invest in companies that target impact outcomes. What’s more, 76 percent of women surveyed prioritize economic, social and governance factors in their investment decisions. But this phenomenon isn’t limited to any one generation or gender. I spoke with Deborah Winshel, BlackRock’s Global Head of Impact Investing, to learn more about what she is seeing in this space and why sustainable investing is here to stay.
First things first. What is sustainable investing?
At BlackRock, we define “sustainable investing” by three key segments: exclusionary screens, ESG considerations and impact investing.
1. Exclusionary screens
Exclusionary screens remove specific products or industries that don’t align with an investor’s values. For example, you may decide you don’t want to invest in tobacco or fossil fuels. This approach was really the first iteration of making investment decisions based on factors other than just financial performance, applying constraints based on personal beliefs.
2. ESG considerations
ESG considerations use environmental, social and governance factors to identify not just what a company does but how they do it. Companies report on how they pursue environmental responsibility, how they support employee diversity, how many volunteer hours they devote to the community every year, etc. We then use these standards to build a portfolio.
3. Impact investing