Celebrating Earth Day is always a good reminder to take stock of our values and how we can align them with our actions. This year’s theme #InvestInOurPlanet puts sustainable investing squarely in the spotlight, and challenges us to explore how our money can really make a difference.
At Genus, we’ve got a number of investment solutions our clients can use to accomplish their wide-ranging investing goals: financial returns, divestment from fossil fuels, support of sustainable or transition-focused investments and making an overall net impact.
Here are three of the best ways to invest in our planet.
Impact equities
These securities integrate environmental, social and governance (ESG) criteria (some also divest from fossil fuel stocks) into a portfolio that creates positive impact. “We’re investing in public companies where a substantial amount of their revenue comes from products or services that positively contribute toward the United Nations Sustainable Development Goals,” says Mike Thiessen, Chief Sustainability Officer at Genus.
Clean energy and climate action are two of the Sustainable Development Goals (SDGs) Genus focuses on. “All of our financial decisions come from carefully tested and analyzed models,” says Thiessen. “They basically rank companies financially out of 100, so we try to buy the ones that are closer to 100.”
Green bonds
For many investors, fixed income is integral to a balanced portfolio. Since regular issuers now fund environmental impact projects with green bonds, says Simon Senécal, Portfolio Manager and Partner at AlphaFixeCapital, “that means as a fixed income investor, you can still have a very diversified portfolio, you can still have the same risk–reward profile and keep the same benchmark; the only thing that’s different is that you have a [measurable] environmental impact.”
Investors can target specific environmental themes such as lowering carbon emissions or zero in on project categories like public transportation. “When we look at the taxonomy we use to define ‘greenness,’ we tell our clients that they’re investing in tomorrow’s economy, so it’s a very positive thing to do,” adds Senécal.
Early-stage investing
Investing in the seed round of a start-up is another way to support companies that are creating eco-impact. “There’s the opportunity to put your capital [directly] behind the company and the product,” says Elyse Crowston, VP of Operations at Active Impact Investments, adding, “The rewards are proportionately high when it goes well. We’ve invested in 22 companies since 2018 and they’re all still in operation.”
Extrinsic rewards aren’t the sole motivator driving the demand for impact investing, says Crowston. Investors can help accelerate early-stage companies’ growth and profitability to solve the most urgent environmental issues—at scale.
Active Impact is part of Genus’ Impact Investment Counsel, enabling Genus to make direct project-level impact investments on behalf of clients such as high-net worth individuals, foundations, charities, and pension funds. Under current securities law, venture capital funds are only available to accredited investors, says Crowston, noting that there is an emergent sector of funding opportunities available to non-accredited investors.
Go All in on Sustainability
Another investment trend is to have a 100% sustainable portfolio, says Thiessen. And with all of the options now available, it’s easier to mix and match your investments to achieve the right balance for your values and goals.
“An investor could invest a portion of their portfolio in our Fossil FreeTM High Impact Equity Fund, which focuses on renewable energy and energy efficiency (as well as health care and education), a portion in a Global Impact Bond Fund, and a small portion in venture capital funds or maybe private debt or infrastructure, depending on your risk tolerance, liquidity needs and other financial needs,” Thiessen says.
The bottom line? The opportunity to invest in the planet — not just on Earth Day but every day — has never been easier.
Interested in exploring the best way for you to invest in the planet and build toward your financial goals? Talk to a Genus Advisor today.
