We hear a lot in the media about how we should save or invest our hard-earned dollars for the future. It’s all generally great material about choosing among the mind-boggling range of options out there. The only problem? So much of it is contradictory.
But there is a framework that offers a way to think about where and how we put our money and it’s one that many studies have shown resonates with consumers. People want to be affiliated with a mission, a cause greater than themselves. A program like the UN-supported Principles for Responsible Investment, or PRI, is a great program to help frame your thinking.
Earlier this month, National Life Group’s asset management firm, Sentinel Asset Management, Inc., became a signatory to the PRI. The initiative is recognized as the leading global network for investors and financial industry participants who are committed to integrating environmental, social and governance (ESG) considerations into their investment practices and ownership policies.1
The principles are voluntary and something to which signatories aspire. In signing on, Sentinel joins nearly 1,500 other asset owners, investments managers and service providers worldwide, representing approximately $59 trillion in assets under management.
So what does this really mean and why is it important?
As its name implies, PRI is about responsible investing, which is about more than financial returns. It is about harnessing the unique power of corporations to help address, to varying degrees, global issues like climate change, water scarcity, environmental degradation, worker health and safety, and human rights. Using ESG criteria in investment decision-making is another way to manage risk. Responsible investing also encourages accountability, transparency and corporate responsibility through directed investments, active proxy voting, corporate engagement and collaboration.
Sustainable and Responsible Investing – A Brief Overview
While responsible investing and ESG analysis have been gaining a lot of attention recently, they are not new ideas. Over the years, they have gone by many different names: responsible investing, sustainable and responsible investing (SRI), socially responsible investing (also SRI), values-based investing, and impact investing. Many of those terms are still in use.
Sustainable and responsible investing in one form or another has actually been around for centuries, evolving from the Quakers’ refusal to invest in enterprises that supported the slave trade over 200 years ago to the fossil fuel free movement of today.
However, sustainable investing is more than just saying no. The purely exclusionary approach still exists — no to alcohol, no to tobacco, or firearms, or fossil fuels. But an integrated ESG approach is becoming more widely accepted. This approach seeks to identify companies that are embracing what it means to be good corporate citizens. In other words, companies are analyzed through the lens of ESG criteria, evaluating a company’s commitment to environmental responsibility (E); community involvement, human rights, diversity, stakeholder engagement, employee relations, health and safety issues, supply chain management (S); and sound business practices, ethical behavior, and overall corporate governance (G). So while there may be many names and different investment methodologies, what these approaches all have in common is a commitment to responsible investment.
A Growing Trend
We have seen growing interest in sustainable and responsible investing over the years as more and more investors are seeking investments that take into account environmental, social and governance considerations. In the US alone, professionally managed assets invested in sustainable and responsible strategies have grown from $639 billion in 1995 to $6.57 trillion in 2014.2 And as noted above, since its launch in 2006, PRI now has nearly 1,500 signatories worldwide, representing $59 trillion.
The United Nations-supported Principles for Responsible Investment (PRI) Initiative is an international network of investors working together to put the six principles for responsible investment into practice. Its goal is to understand the implications of Environmental, Social and Governance issues for investors and support signatories to incorporate these issues into their investment decision making and ownership practices. In implementing the principles, signatories contribute to the development of a more sustainable global financial system.3 (You can learn more about PRI by checking out www.unpri.org.)
Putting it All Together – Cause!
Although Sentinel does not incorporate ESG analysis across all asset classes, we do invest for the long-term. Being responsible stewards of capital as well as being good corporate citizens is an integral part of who we are at Sentinel and it is at the heart of National Life Group. From our environmentally–friendly headquarters in Montpelier, VT, to our support of communities through the National Life Group Charitable Foundation and employee volunteerism, we live our values of Do Good. Be Good. Make Good. every day. By becoming signatories to the PRI, we are demonstrating our commitment to these core values. It is one more way for us to walk the talk. It is part of our cause.
2 2014 Report on Sustainable and Responsible Investing Trends in the United States, US SIF Foundation, The Forum for Sustainable and Responsible Investment.
Sentinel Investments is the unifying brand name for Sentinel Financial Services Co., Sentinel Asset Management Inc., and Sentinel Administrative Services Inc. Sentinel Funds are distributed by Sentinel Financial Services Company, One National Life Drive, Montpelier, VT 05604 | 800.282.FUND | sentinelinvestments.com
The PRI Association is independent of all National Life Group companies.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
Before investing, carefully consider a fund’s objectives, risks, charges and expenses. Summary and full prospectuses containing this and other information are available from sentinelinvestments.com. Please read them carefully.