Details for UBS FINANCIAL SERVICES-BURISH - Ad from 2021-10-10

What is sustainable investing?
by Andy Burish, founder and managing director of The Burish Group

In recent years, Americans have grown
increasingly aware of serious threats to our
environment, and in turn to our everyday lives.
There is a sense that our public and private
worlds are on unsustainable paths, and that
a tipping point may have been reached, if not
already exceeded.
The financial services industry has taken note
of these concerns and has begun offering more
investment opportunities designed to channel
money into fostering a safer, fairer, and more
sustainable world.
Buzzwords and acronyms abound,
however, so it’s understandable that many
are uncertain about what constitutes a
“sustainable” investment.
First and foremost, sustainable investing is
not an investment product or a separate asset
class. It’s an investment philosophy. Sustainable
investing refers to an investment approach
which incorporates sustainability considerations
in the investment process, all while seeking
market-rate financial returns.
Actually, there are three related—yet distinctly
different—approaches to investing sustainably.
The first of these approaches is Environmental,
Social, and Governance (ESG) Integration.
In this approach, an investor looks at how
companies are managing relevant ESG topics
and takes this information into consideration
in what they decide to invest in. Examples
of ESG topics include the ways in which
companies are prepared to address climate
change, whether they are playing fair with
workers and customers, and whether they
have diverse boards or are transparent in
financial reporting. A second approach is
applying Exclusions, which excludes businesses
and entire sectors whose products are not
aligned with investor values, such as tobacco,
liquor, and controversial weapons. A third
approach to sustainable investing is dubbed
impact investing, which seeks to create a
“better world” by purposefully seeking to drive
measurable, positive social or environmental
change by investing in companies which
are helping to solve global challenges and
committing to tracking and reporting the
positive change that this investment generates.
Addressing misunderstandings
Besides uncertainty about what constitutes
sustainable investing, there are several myths
surrounding the asset class itself. For example:
Myth #1 – “Sustainable investing means
sacrifice returns.” Historically, the MSCI KLD
400 Social Index, a capitalization-weighted
benchmark comprised of companies with high
ESG ratings, has performed similarly to the
large-cap S&P 500 Index.1 More broadly, the
MSCI KLD 400 Social Index outperformed the
MSCI USA IMI index, which also includes midand small-cap companies, over the
10-year period through June 30, 2021.2

Myth #2 – “Sustainable investing is a
passing fad.” Since 2014, assets managed
sustainably worldwide have almost doubled
to $35 trillion.3 Nearly three-quarters of UBS
family office clients invest a portion of their
assets sustainably, and more than a third plan
to make the sustainable asset class the bulk of
their investments over the next five years.4
Myth #3 – “Sustainable investing only
includes stocks.” Portfolios comprised of
companies that meet sustainability standards
can also include fixed-income securities
issued by institutions, companies, and
municipalities. According to the Climate Bond
Initiative, $393 billion of so-called green,
social and sustainability- bonds, which fund
environmental, social or sustainability friendly
projects, were issued by June 2021, an amount
projected to set new records by the end of this
year.5
Myth #4 – “Sustainable investing is only
about the environment.” As noted earlier,
combating climate change and protecting the
Earth’s natural resources are only two facets
of sustainable investing. In May, for example,
Amazon issued its first “sustainability bond,”
which raised $1 billion to fund, in addition to
renewable energy and clean transportation,
“sustainable buildings, affordable housing,
and socioeconomic advancement &
empowerment.”6 Opportunities exist in themes
related to society as well, like health-tech, edutech, or diversity and equality.
Myth #5 – “Sustainable investing requires
too much expertise.” Certainly, identifying
companies that pass multiple sustainability
screens does require in-depth research. But
there are numerous professionally managed
ways to gain exposure to this important
category of investments, including mutual
funds, exchange traded funds, and separately
managed accounts.
Of the three major forms of sustainable
investing, ESG integration is among the largest
and casts the widest net.
The environmental screen identifies companies
most committed to reducing their carbon
footprint, cutting pollution and waste, and
efficiently utilizing natural resources. From a
purely investment perspective, businesses that
score high in those planet-friendly areas also
could benefit from less government regulation
while potentially avoiding expensive litigation.
Since 2000, the U.S. Environmental Protection
Agency has brought more than 17,000 such
cases, resulting in over $61 billion in penalties.7

opportunity could improve productivity while
helping attract and retain talented workers. In
one recent survey, more than three-quarters of
respondents said that inclusivity was important
in deciding where to work, and almost 40%
said they would leave their jobs for a more
inclusive workplace.8
Finally, the governance screen in ESG
recognizes companies with sound business
ethics and best-practice board structures,
factors that could protect shareholders against
the effects of tax or earnings fraud. Since a
whistleblower program was initiated with
the U.S. Securities and Exchange Commission
in 2012, the agency has received more
than 33,000 tips about possible corporate
malfeasance, mostly related to the improper
accounting of revenue.9
Together, toward a better world
At The Burish Group, we’re committed to
driving positive change. Innovative finance,
of which sustainable investing is a key
component, can be good for society and good
for the environment—while still generating
good investment returns for our clients.
Individual and institutional investors alike are
increasingly drawn to this distinct strategy for
putting money to work.
We want to know what you care about, and
to address your cares with individually crafted
portfolios designed to help achieve your
financial and ethical goals. Our UBS sustainable
investment team manages nearly a half trillion
dollars in various sustainability strategies, a
more than 50% increase from just two years
earlier.10 The team utilizes a data set of more
than 11,000 issuers, each with over 500
sustainability indicators aggregated into six
sustainability topics that go beyond even the
traditional ESG framework.11
The problems that sparked the creation of
sustainable investing strategies aren’t likely
to go away any time soon. In fact, they
are more likely to accelerate as complex
environmental and social issues interact and
become more front and center. That makes
now a good time to adjust your portfolio to
reflect these concerns. Call us today to start
the conversation.
Andrew Burish is a Financial Advisor and
Managing Director at UBS and can be reached
at 608-831-4282 or andrew.burish@ubs.com.

The second ESG factor—social—is timely
as well.
Consumers, employees, and employers
today are attuned as perhaps never before
to issues of diversity and equal opportunity
in the workplace. A culture of inclusion and

The Burish Group
UBS Financial Services Inc.
8020 Excelsior Drive, Suite 400
Madison, WI 53717
608-831-4282
Over $4.9 billion in local assets under management*

advisors.ubs.com/burishgroup

UBS. “Myth vs. reality”.
https://www.msci.com/documents/10199/904492e6-527e-4d64-9904-c710bf1533c6.
https://www.statista.com/statistics/742097/sri-assets-value-by-region/.
4
UBS. “Myth vs. reality”.
5
UBS. “Sustainable Investing Perspectives”. August 2021.
6
https://www.aboutamazon.com/news/sustainability/amazon-announced-issuance-of-1b-sustainability-bond.
7
https://violationtracker.goodjobsfirst.org/prog.php?agency_sum=EPA.
8
https://www2.deloitte.com/content/dam/Deloitte/us/Documents/about-deloitte/us-about-deloitte-unleashing-power-of-inclusion.pdf.
9
https://www.cfodive.com/news/improper-revenue-recognition-sec-fraud-cases/583889/.
10
UBS. “Sustainable investing. UBS capabilities.”
11
UBS. “CIO sustainability scores for issuers.” February 2021.
1

2

3

*As of September 1, 2021.
As a firm providing wealth management services to clients, UBS Financial Services Inc. offers investment advisory services in its capacity as an SEC-registered investment adviser and brokerage services in its capacity as an
SEC-registered broker-dealer. Investment advisory services and brokerage services are separate and distinct, differ in material ways and are governed by different laws and separate arrangements. It is important that clients
understand the ways in which we conduct business, that they carefully read the agreements and disclosures that we provide to them about the products or services we offer. For more information, please review the PDF
document at ubs.com/relationshipsummary. © UBS 2021. All rights reserved. The key symbol and UBS are among the registered and unregistered trademarks of UBS. UBS Financial Services Inc. is a subsidiary of UBS
AG. Member FINRA/SIPC. VIP_09202021-1 Exp.: 09/30/2022

Categories