Socially responsible investing (SRI) and environmental, social, and governance (ESG) principles aren’t new concepts. Many of the exchange traded funds addressing these styles can credibly be considered “old.” As such, we need occasional refreshes.
The Calvert US Select Equity ETF (NYSE Arca: CVSE) is an example of an ETF that could serve to refresh the responsible investing proposition. Yes, CVSE is one of the newest additions to the responsible investing ETF fray, having debuted in January, but its utility as a revitalized responsible investing option extends beyond age or lack thereof.
CVSE is a pertinent idea for environmentally and socially conscious investors today because those issues are escalating in importance. It is also pertinent because more companies and governments are assessing unique avenues for improving those scenarios.
“The climate and nature emergencies are mirrored by a sustained social emergency characterised by insecure jobs, racial discrimination and levels of personal debt reaching worrying new heights. This is contributing to divided societies, health inequalities and falling life expectancy for the economically marginalized,” reported Responsible Investor.
Inside CVSE’s Relevance
Understanding responsible investing is also vital for investors considering a strategy such as CVSE. Fortunately, it’s easy to comprehend.
“Responsible investment involves considering environmental, social and governance (ESG) issues when making investment decisions and influencing companies or assets (known as active ownership or stewardship). It complements traditional financial analysis and portfolio construction techniques,” according to Principles of Responsible Investment.
A significant point in favor of CVSE is that the ETF is actively managed. This means it can more readily address stocks that credibly fit the ESG and SRI bills.
Many of the funds in these categories are passive. This subjects advisors and investors to lack of uniformity among index providers in terms of defining ESG and SRI. Another benefit of embracing active approaches, such as CVSE, in this category is that active arguably better positions investors to avoid greenwashing — the boasting of ESG credentials that are weak or nonexistent.
Active ESG and SRI funds can also serve another aim: Enhanced focus on social issues corporations’ responsiveness to those matters. As Responsible Investor notes, seasoned ESG investors have known about the importance of social issues for years, but have struggled to find adequate avenues for investing to the end of improving social causes.
CVSE allocates over half its weight to the technology, financial services and healthcare sectors. The ETF’s annual fee is 0.29%, or $29 on a $10,000 position.
For more news, information, and analysis, visit the Responsible Investing Channel.