How to Evaluate Socially Responsible Investing
FINDING SOCIALLY responsible investments is easier than ever before, but questions still remain around just what impact these investments are actually having.
A responsible fund may call itself a low-carbon exchange-traded fund, but how much carbon is it actually mitigating?
"The challenge for impact investors is it can be hard to understand what's actually going on in these responsible fund strategies," says Amy O'Brien, head of responsible investing at Nuveen in New York City.
Socially responsible investors may be surprised at how many low-carbon ETFs hold the FANG names – Facebook (ticker: FB), Amazon (AMZN), Netflix (NFLX) and Google, now Alphabet (GOOG, GOOGL) – and other tech companies that have just bought carbon offsets to reduce their footprint, says New York-based Kellen Parker, vice president of Analytics at Flat World Partners.
Here are a few ways investors can assess whether they are making socially responsible investments.
Learn to measure socially responsible investments.
Mind the data gaps.
Understand the methodology behind the rating.
Work with a professional