By Mark Sloss
Wilde Capital Management, LLC
Why Should our Spending and our Investing Get Different Rule Books?
We are all mindful of how we consume. It might be making sure we put healthy food on the family table, supporting a local business, or being confident products are safe for our kids. We spend money on products and services we bring into our homes, our businesses, our lives, that we want to fulfill and reflect our needs, interests, and priorities.
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There are so many factors that consciously and unconsciously go into those daily spending decisions. Why then are our saving and investing decisions boiled down only to how much money we can make in the time we can commit and within the amount of risk we can tolerate? Why don’t all the things that concern us standing in the grocery store, or the clothing store, the car dealership or the appliance store matter when it comes to making multi-year decisions about our money?
We are tethered to this idea that our responsibility is to make money by whatever means necessary and with no care for the consequences and then give to the causes about which we care afterward. Investing isn’t philanthropy. That gets said a lot. But, that is also a false equivalency. It is based on the assumption that informed investing decisions with the things that matter to us beyond how much and how fast somehow results in doing poorly, or at least doing less well. There is not, however, evidence that proves that to be the case.
When it comes to investing, there are hundreds of trillions of dollars worth of places to put our money in the world. We don’t lack for options. It is reasonable and appropriate to think about what our money is doing while it is out there. There are things in every other walk of life we would likely want to avoid in our consumption – dangerous products, unsafe workplaces, human trafficking, animal abuse, poisoning communities. There are also things we might want to promote – access to nutrition, clean water, and education, fair workplaces, energy efficiency, a clean environment. Those same things matter in our closets and pantries and with the money we invest and lend.
Just like choosing to avoid product A and put product B in the shopping cart instead, we can make investment decisions to avoid certain types of objectionable business and market practices and instead focus on companies that promote the things that make the world a better place in which to live. And, again, this isn’t philanthropy. Even ruthless capitalists at no less than Harvard Business School have published papers explaining that sustainable and responsible business practices lead to good and arguably better company performance.
It would be exhausting having to think about every possible concern or controversy individually to make investment decisions though. We are fortunate that there is a straightforward way to do it at the portfolio level now. It is called ESG (Environmental, Social and Governance) investing. ESG is grounded in the idea that it is possible to invest for people, the planet, AND profit without compromise. It provides us the opportunity to think about healthy homes, healthy communities, and a healthy planet, equal access and opportunity for all, and fills our portfolios the way we fill our homes and our lives.
For more information contact: MDSLOSS@WILDECAPITALMGMT.COM, 908-938-6300