What is ESG investing and is it really ethical?

This post was paid for and produced by our sponsor, Zevin Asset Management, in collaboration with WBUR’s Business Partnerships team. WBUR’s editorial teams are independent of business teams and were not involved in the production of this post. For more information about Zevin Asset Management, click here.

Strategies focused specifically on ESG (environmental, social and governance) research analyze a company’s environmental impact, social responsibility and governance practices to help make decisions about which companies to invest in.

For example, how does the company manage its impact on the planet? How does the company treat its employees, stakeholders and the community? How does the company ensure it is run ethically and transparently?

Investing for future goals does not necessarily have to be at odds with leading an ethical lifestyle.

“Know that investing is never without impact. Whether you are conscious of it or not, no investment is neutral — and you can choose what kind of impact to make with your investments and whether your impact undermines or amplifies your values,” explains Sonia Kowal, President of Zevin Asset Management, a boutique Boston-based firm with expertise in sustainable investing.

Considering ESG factors when analyzing companies for potential investment helps investors single-out companies that are better positioned for long-term success. Companies with strong ESG practices have been shown to mitigate risks, capitalize on opportunities and drive innovation.

However, ESG investing and having an impact are not one and the same. Taken in by false promises of the positive change their investments can create, people are sometimes persuaded by impact washing to allocate assets to products or strategies that do not actively create change or reflect their values. For example, many climate and sustainability-focused funds own weapons companies or fossil fuel companies.

Some investors go further to create positive social and environmental impact that would not have otherwise occurred solely from stock picking. Zevin Asset Management employs a practice known as shareholder advocacy to influence corporate behavior and move the needle on urgent issues such as human rights, racial equity and climate change. Positive change, or additionality, happens when companies are pushed to take steps to meaningfully improve their behavior that they wouldn’t have otherwise taken. When identifying pressing issues to advance, the firm seeks to amplify the voices of impacted stakeholders, who are closely connected to the issue at hand and therefore best-positioned to drive solutions.

As a 100% employee-owned and majority women-owned and led firm, Zevin has been intentionally built to represent varied backgrounds and educational and professional experiences.

“We firmly believe that a more diverse, equitable and inclusive workforce will help us better capitalize on market opportunities, promote innovation, improve our resiliency, as well as reinforce our firm’s commitment to social responsibility,” shares Kowal.

As a Certified B Corporation, Zevin Asset Management also meets rigorous standards of social and environmental performance, accountability and transparency.

Learn more about how Zevin Asset Management helps individuals, families, institutions and foundations align financial goals with values and ethical concerns at zevin.com.

See important disclosures at zevin.com/web-disclosures.