ESG Investing – The Basics
ESG investing is fundamentally a framework for making value-based investments. As the acronym suggests, “ESG” refers to a triad of factors used to evaluate corporate practices of an organization.
- Environmental – is the organization a quality steward of the environment? Do their practices consider natural resource efficiency and conservation?
- Social – how does the organization treat its own people and its customers. Does it make a positive impact on its immediate community and beyond? Labor standards and
- Governance – how does the organization operate at the highest level? Executive compensation, board composition, business ethics, and political contributions or relationships may all come into focus.
The ESG framework is usually used in the context of publicly held companies and their traded stocks. However, there is nothing to stop an investor from using the framework to assess other kinds of assets (e.g. private real estate investments, pre-IPO startup/“equity crowdfunding,” or municipal bonds.)
Continue reading ➞ What the Shit is ESG Investing?
The very idea of socially responsible real estate investing may raise some eyebrows. Some have argued, credibly, that profitable real estate investing inherently promotes economic inequality. Housing policy in the United States at the federal and local level has historically reinforced racial economic inequality (as Richard Rothstein vividly points out in The Color of Law). Depending on the herd you run in, you also may be well aware of the cyclic displacement that gentrification can effectuate – urban areas were hollowed out by “white flight” – fleeing capital, a diminished tax base, and lack of economic opportunity; those areas become attractive again as affluence grew around these submarkets; communities that settled there (in some cases because it was the only affordable neighborhood) are displaced as yuppies flock to industrial chic yoga studios and beer gardens and rents correspondingly rise.
Continue reading ➞ Socially Responsible Real Estate Investing
Robo advisors have been around for well over a decade. Jack Bogle (RIP) – founder and longtime CEO of Vanguard – is widely credited with investing the concept of an “index fund”. Technology, namely the rise of platform-based investing and machine learning in portfolio allocation, has since enabled robo advisors like Betterment and Wealthfront to aggregate index funds, pools of bonds, and other assets to present retail investors (like you and me) a plug-and-play, ready-made portfolio with built-in diversification and broad exposure to the market.
Continue reading ➞ ESG Robo Advisors: Present & Future