Historically, people have had a disconnect between what they value (socially, environmentally, etc.) and their actual investment capital. However, in a 2017 survey, 75% of respondents said they were interested in investments, companies or funds that focus on achieving both financial returns and have a social or environmental impact. As traditional investing typically focuses on returns alone, values-based investing has a duel-purpose focus: align your investment capital in the common good making a positive impact, while still providing financial returns.
Access to investments that produce attractive, risk-adjusted returns is a typical requirement to all investors. Any quality investment must be focused on the return and risk to investors. A values-based investment philosophy is no different.
Values-based investing introduces a second potential return to investors: impact across a range of social, environmental and economic aspects. It offers investors the opportunity to create measurable impact in communities.
The traditional investment theory can eliminate emotion and passion from the investment decision-making process, resulting in a cold and joyless relationship with the money that investors have worked so hard to amass. Values-based investing asks investors to joyfully consider their passions and values when deploying their capital into the world.
Values-Based Investing is Not…
Values-based investing is not another word for charity. CommonGood is focused on bringing to market ‘good deals that do good.’ These investments are made into for-profit businesses and strategies that seek to maximize returns. Being cognizant of the good that business can do, and the impact it can have on our communities and the world, sets values-based investing apart from traditional investing.
Some investors believe you can’t have your cake and eat it too, i.e. invest for attractive risk-adjusted returns and also for impact. We, and the trillions of dollars in institutional capital already invested in this manner, disagree. Instead, values-based investing takes a long-term approach, considering all stakeholders, and understands that a business is much more than just its bottom line.