Jeff Finkelman contributes to ETF.com's "Why Impact Investing's Time Has Come"
Two catalysts are propelling ESG investing forward, according to Debbie Carlson of ETF.com: increasing client demand for responsible investing and improved technology that makes it possible to track ESG-related data. In her article, “Why Impact Investing’s Time Has Come”, Carlson explores these trends with Jeff Finkelman.
“Environmental, socially responsible and governmental investing has evolved over the years, from simply screening out companies based on religious, moral or ethical grounds, to including companies as a way to reward good behavior, or encourage them to change business practices,” writes Carlson. The latest evolution involves a focus on making a social or economic impact, offering yet another way to support a cause.
Finkelman notes that as investors incorporate socially responsible investing into their portfolios, their motivations can change. Previously, for example, investors largely voiced concerns over potential underperformance of impact strategies; now, more are taking heed to evidence that ESG factors can outperform and reduce volatility. This fundamental shift in perspective has also become top-of-mind for companies.
Finkelman explains that critical to furthering the ESG evolution would be better market consensus on how ESG investing can drive better returns. As data collection increases, the ESG investing industry could reach additional clarity. This may mean that some socially responsible EFT’s may close, however Jeff remarks, "the product will be more robust going forward and more stable perhaps.”
Jeff Finkelman is a senior research associate, impact investments, at Athena Capital Advisors, where he concentrates on ESG and impact investing across all asset classes. He joined Athena Capital from the US Small Business Administration, having served as an investment officer within the SBA’s Office of Investment and Innovation.