ESG & DEI: LGBTQ+ Values In Action

What is ESG and why is it important?

ESG stands for Environmental, Social, and Governance investments.

It’s becoming more crucial than ever to address some of the world's most pressing challenges to ensure a sustainable future for people and our planet, including:

• Climate Risk & Returns
• Environmental Regulations
• Corporate Transparency

And, of special interest for us in the LGBTQ+ community …

• Promoting DEI
• Protecting Human Rights

DEI initiatives and investments were THE hot thing in corporate America a few years ago. Today: not so much.

But today, the business community — long averse to political risks or controversies — is backing away from DEI programs in the wake of widespread attacks from lawmakers, high-profile rich guys like Elon Musk, Bill Ackman, and conservative activists like Trump aide Stephen Miller.

This indicates a significant shift in public sentiment towards these types of investments. 

Some companies are changing programs designed to support women and people of color because of lawsuits — many have been filed over these programs, more than 20 by Miller's America First Legal. And other companies worry about litigation.

Companies that never cared much about DEI or fear lawsuits over programs are using the moment to back away. 

Others are sticking with these efforts but doing it quietly — often changing the acronym to related topics but not directly stating they are DEI.

The ESG Landscape: A Rollercoaster Ride

In 2021, the ESG** sector experienced substantial growth, with inflows reaching $70 billion. 

And, like DEI initiatives, politics has changed how people talk about ESG. 

40% of U.S. companies got negative feedback, so some started "greenhushing" to not talk about ESG directly. 

Critics have accused financial firms of prioritizing a perceived "woke" agenda over fiduciary duties, leading to a re-evaluation of communication strategies and terminology.

There are many benefits to embracing an ESG investment strategy, including:

Ethical Investment Decisions

You have the opportunity to make ethical investment decisions that resonate with your personal values. ESG criteria allow you to evaluate the behavior of companies beyond their financial performance, ensuring that your investments support businesses that prioritize sustainability, responsible governance, and positive societal impact.

Promoting Positive Change

When investors demand transparency, ethical conduct, and sustainability, businesses are incentivized to adapt their behavior and practices to these values.

Mitigating Risks

Companies with strong ESG scoring performance are often better prepared to manage risks, whether they are related to environmental challenges, labor disputes, governance issues, or regulatory changes. Investing in such companies can help you mitigate potential risks in your investment portfolio.

Long-Term Sustainability

Sustainable investments are focused on the long term. Companies that embrace ESG principles tend to be more resilient in the face of economic downturns or market fluctuations. Their strong ethical foundations often translate into stable financial performance, making them attractive choices for investors with a long-term perspective.

Investor Satisfaction

Fostering a sense of connection between your wealth and your values can bring a profound sense of satisfaction and purpose.

Attracting Responsible Investors

Investing with ESG principles can attract like-minded investors. This can lead to greater demand for ESG-conscious investments, potentially driving up their value and creating a more vibrant market for ethical investments. Increased interest from investors is fueling fast-track ESG in just about every corner of the business world.

Governments, stock exchanges, and financial institutions are promoting responsible investment practices. Investing in line with these trends can result in favorable treatment and opportunities, such as better access to capital and enhanced market presence.

Additional Resources:

ESG Investing in Flux: What You Need to Know and Where We're Headed

Be A Force for Good: ESG Considerations In Your Investment Strategy

Is ESG bullsh*t? Making Sense of ESG and SDGs: A Guide to Responsible Investing

Despite Backlash, Companies Still Benefit From Being Pro-LGBTQ

Insurance businesses risk putting "profit over people" on LGBTQ+ issues

How to Build an LGBTQ-Friendly Investment Portfolio

Disclosures

ESG investing involves the exclusion of certain securities for non-financial reasons. This may result in the investor forgoing some market opportunities that may have been available to those not subject to such criteria. There is no guarantee that any investment goal will be met.

All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.