Rachel Infante Featured on Kare 11's Your Money

Birchwood Financial Partners
Jul 13, 2023 8:18:12 AM

Rachel (1)

Birchwood advisor Rachel Infante has recently been featured on Kare 11's Your Money to discuss what "green investing," or Sustainable Responsible Impact (SRI) Investing, is and how to do it with Gordon Severson.

Rachel's interview starts around 10:47.

Resource: Your Full Guide to Sustainable, Responsible, Impact (SRI) Investing

Transcript of Rachel's segment:

Gordon: You can make a lot of money by going green and investing in green! A hot trend in the world of investing these days is investing with your values and your beliefs, and only investing in companies that match those values. For many people, these values include sustainability and going green.

So I asked Rachel Infante from Birchwood Financial Partners to stop by the studio and tell us a little bit about green investing. So what is green investing all about?

Rachel: Well, first off, thank you so much for having me. I'm so excited to be here!

So this whole idea of green investing, honestly, has been an idea for a long time. Initially, it started out as what's known as SRI Investing or Sustainable, Responsible, Impact Investing, and really, SRI took a big hold in the '60s when people were just pouring their money into companies that avoided promotion in areas like guns, weapons, alcohol, or tobacco, also known as the "sin stocks" at that time.

Since then, over the last 10 to 15 years, we've seen this huge emergence of ESG investing, which stands for Environmental, Social, and Governance, and that really seeks to evaluate companies based on their environmental standards, their societal impact, and also their diversity, inclusion, or how they treat their employees, for example. Millennials and Gen Z have really taken a liking to this new ESG overlay, which essentially evaluates companies on all different types of criteria. So trillions of dollars have poured into this new SRI/ESG space.

Gordon: So these companies kind of get like a score that maybe an investment company, like Fidelity, Vanguard or something like that might give them a score? Is that kind of how they determine these companies?

Rachel: Yeah, so there's lots of different companies out there that do the scoring or the rating or evaluating, and each tool kind of has their own metrics for how they might evaluate a company. But essentially, yes, you're given a score or some sort of metric that says you are doing something right for the environment, right for society, or right underneath your corporate lens with your employees.

Gordon: Then how can you find these companies or invest in them? Are you investing in a fund that these investment firms are creating?

Rachel: Yeah, so lots of different ways, honestly, and this has become one of the biggest changes in this particular area because as more and more companies are evaluated over time, we see a lot more be included in this SRI/ESG space. So there's a lot of investment opportunity, especially in recent years, and really it just comes back to traditional investing. So you can access these funds through individual stocks, individual bonds, mutual funds, and ETFs, which are a collection of stocks and bonds, and some private investments if you're looking for large initial outlays. So there's lots of different ways.

But in general, you would have to have a brokerage account that you open where you would actually purchase a fund or stock or bond, and there are lots of different ways to open brokerage accounts. My recommendation would be to hire a financial advisor. Again, it's not just about opening an account, it's about figuring out what your long-term financial planning goals are, and then on top of that, aligning those goals with any values that you might have.

Gordon: And then I know oftentimes these funds will actually list out every company once you kind of go into the finer details so you can see what companies are in there and see what ones are getting these higher scores.

Rachel: Absolutely. I think it's always important if you're investing in anything, to do your own research. So make sure that you are looking at exactly what you're putting your money into. Morningstar would be one third-party that a lot of people use to, again, like you were just mentioning, look at a particular fund and say, what is my fund actually comprised of? What companies are underneath there? And then you can go even a step further to say, what are those companies doing that specifically align with my values?

Gordon: And there's another way that you can invest in green companies is these are the companies that are running their company in a green sort of way, but you can also invest in companies that are creating green products or new innovations--if you could tell me about how people can invest in those companies.

Rachel: Yeah, absolutely. So again, this is probably one of the most complicated areas in ESG investing, mainly because companies get evaluated on a lot of different levels. So first you have to determine what you are trying to accomplish with your investment. If you are someone who really values green investing, you're going to look at green companies, right? And then underneath the green lens, you need to really determine what those companies specifically doing to support that particular cause.

And to your point, there are lots of different ways to do that. Right? So it may be a direct project that they're working on. It may also be just how they run their business so that they have a cleaner carbon footprint underneath their lens. Lots of different ways to do it.

Gordon: And with some of these funds, you can get started with just a couple hundred dollars, right? If someone is new to investing, they thought of it as something as "these are companies that are big and I could never afford," but this idea of green investing is interesting to them, they could probably get started for a few hundred dollars, right?

Rachel: Yeah, and I think that's honestly why we've seen a lot of Millennials pour into this space. It's an affordable area, there are lots of different options, lots of different ways to access it, and honestly, a lot of transparency and a lot of information out there to do your own research.

Gordon: It's not just "green" and "sustainability," but you can invest with your values no matter what they are. You can invest with your religious beliefs, you can invest with political beliefs, kind of regional beliefs. That's really kind of interesting that that's where we're at now, that you can really fine-tune your portfolio to what you believe in.

Rachel: Yeah, it's honestly a fully customizable space at this point.

And to circle back to another really important layer: diversity, how are companies addressing diversity amongst their board of directors and amongst their employees? What standards are they operating on, in terms of how they are treating their employees from an ethical standpoint? So there are many, many layers to it. So it goes above and beyond just investing based on religion, investing based on political beliefs, but also investing based on how are these companies doing internally and honestly, what are they doing to promote good in the world and also good underneath their corporate umbrella?

Gordon: Now the one concern I'm sure a lot of people have is when you're going so narrow with your investments, should people be concerned about smaller returns, maybe not making as much with some of these funds compared to some of the other funds or other investments that are out there?

Rachel: Yeah, I would say there has been this huge trend moving in this area. Not a ton of historical data, but I think over time we'll get more. So as more of the evaluations are happening, more companies are pouring in, more dollars are being invested and more time has passed, I think we'll have clearer pictures of what that might look like.

What we've personally seen is there hasn't been a sacrifice on returns. However, I want to preface it with this: first, you need to start with your financial planning goals, so don't invest on a strategy based solely alone on performance. That's only one aspect of what you might need to achieve long-term growth, long-term financial independence, so start first with your financial planning goals and then layer on your values and your strategy going forward. Really, this whole ESG/SRI strategy should not be used based on performance alone, so again, coming back to having a financial planner that can work with you on your financial plan, that can help you better define what those long term goals are, and then can build a customized portfolio based on your values.

Gordon: Are you starting to see more investors who are specifically coming and asking about this? That "I'm new to investing, and this is why I'm into it," because I've heard this is a thing. Is this kind of bringing people to the world of investing?

Rachel: Absolutely, yeah. We've seen a huge pour-in of people really focused on this particular area. And to be honest, while it feels like a trend now, in the next ten to 15 years, this is just going to be the industry norm. So I truly believe that companies will just be required essentially, over time to have an SRI/ESG overlay to it, because it's just going to be the way of the world for sure.

Gordon: So, a lot of great options out there for you to check out! Thank you so much, Rachel, for stopping by and introducing us to this world of green investing. 

SRI: What It Is and How To Do It

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