In recent years, there has been a growing interest in roots based investing, which focuses on aligning investments with personal values and driving positive change. By considering environmental, social, and governance (ESG) factors, roots based investors aim to generate sustainable, long-term returns while making a positive impact. This article explores the key principles of roots based investing, its growth, and the ways it creates value for investors, communities, and the planet.
roots based investing integrates personal values into the investment process
At its core, roots based investing is about integrating personal values, morals, and ethics into investment decisions. It moves beyond solely financial motivations to consider the broader implications of where and how capital is deployed. Investors screen potential investments based on ESG factors important to them, such as climate change, human rights, or diversity and inclusion. This allows capital to flow towards more conscious companies while avoiding those misaligned with their values.
the roots based investing market has seen exponential growth
Roots based investing has moved from a niche concept to a major force with impressive growth. Global sustainable investing assets totaled $35.3 trillion in 2020, a 15% increase from 2018. Millennials are leading the charge, with 9 in 10 interested in sustainable investing. This generation and the next hold different expectations for how their money should be invested. Companies are also increasingly linking executive pay and bonuses to ESG goals, demonstrating a shift in priorities.
roots based investing benefits investors, communities, and the environment
At its best, roots based investing creates value for investors, strengthens communities, and benefits the environment. Financially, roots based funds often meet or outperform non-ESG alternatives over the long-term by selecting forward-thinking companies. They also carry less risk, as they avoid unsustainable businesses prone to controversies. Positive social and environmental impact is supported through shareholder engagement, investments in underserved areas, sustainable operations and more. Overall, roots based investing aligns financial decisions with building an equitable, clean economy.
In closing, roots based investing thoughtfully deploys capital to generate sustainable returns and positive impact. As demand rises, expect roots based principles to further shape investing and reinforce the link between purpose and profit.