With Beyond Meat (BYND) receiving its public offering of $240m last week followed by an immediate rise in its stock, bringing its market cap to $3.4b, investors are flocking to environmental-friendly innovation-tech. But what is socially responsible investing and how do you align your values with your investments?
It's estimated that $12t of investments are allocated in environmental, social, and governance (ESG) assets, compared with $46.6t of total assets under professional management. The iShares MSCI KLD 400 leads the pack as the largest ETF in this space with $1.3b invested. It defines itself as investing in “US securities that provides exposure to companies with outstanding (ESG) ratings and excludes companies whose products have negative social or environmental impacts.”^1 Broadly defined, it can fail to live up to our standards as Facebook and Google are its top holdings. Although those companies meet ESG criteria, they fail to live up to our security standards that guarantee our digital privacy, democracy, and diversity in the workplace^2.
With unprecedented urgency, fossil fuels continue to wreak havoc on our climate. They also keep alive the authoritarian regimes that threaten democracy and the human rights of its citizens. It's understandable to jump to investments that are not the likes of Exxon and Chevron. These are two companies, however, who are making strides in eco-friendly innovation-tech^3. If that statement is not enough to confuse you, you may as well invest in solar panel and battery production companies, however, you should know that China makes 60% of all solar panels globally.
Arguably still, solar panels and batteries require gold, lithium, and other precious metals from an increasingly limited supply. Mining the earth itself tends not to be in the ESG group but battery-related energy companies, like Tesla, are. Solar energy stocks were leading performers this year. Invesco Solar ETF "TAN" was up nearly 40% in two months through March. However, with 30% of its holdings in China, volatility is expected as aggressive U.S.-driven tariffs are about to be in play.
At Eureka Wealth Management, conscious investing and innovation are central to our investment philosophy. I help my clients align their values with their investments and manage the risk that comes with investing. Call for a free initial consultation at (760) 537-0791 or online at eurekawealthmanagement.com.
Financial Times: "Exxon and Chevron join industry climate change group" https://www.ft.com/content/e471cea6-bcce-11e8-94b2-17176fbf93f5