Cove Financial Planning, LLC
Do Well While Doing Good



Types of Responsible Investing


An increasing number of investors are looking beyond returns and cost to satisfy their criteria for a “good” investment. Today, investors want their money to do more than fuel their own personal goals. They want to promote social and environmental change. According to The Forum for Sustainable and Responsible Investment, Socially Responsible Investing (SRI) accounted for more than $1 out of every $4 under professional management in the U.S., as of the end of 2017. That’s over $12 trillion in assets!

So, what’s up with all the jargon?

There really is a difference between some of the words and acronyms used to describe Responsible Investing (largely referred to as the catch-all term for impact investing). Responsible Investing, as a whole, seeks to create positive, measurable social and environmental impact along with a financial return.


ESG refers to the environmental, social, and governance practices of an investment that may have an impact on performance. What the heck does that mean? Simply put, ESG investors just look at these factors when they’re judging investments because they know it affects performance. It does NOT mean that ESG investors are actively eliminating companies that exhibit negative ESG characteristics. (We’ll get to that). ESG investing is the tip of the responsible investing iceberg.


Socially Responsible Investing (SRI) calls ESG investors’ bet, and raises them. SRI investors not only say that ESG factors affect performance, they go one step further by also actively eliminating or selecting investments based on specific ethical guidelines. While ESG investors say that maximizing returns is the most important priority (and ESG factors play a role in returns), SRI investors say two priorities are equally important: achieving investment returns and having a positive social and environmental impact.

What about performance?

The recent growth of ESG and SRI investments is, in part, attributed to evidence that investing in “good” companies doesn’t necessarily mean sacrificing returns. So, you can have your cake and eat it too! In 2015, Deutsche Asset & Wealth Management and Hamburg University found that the majority of responsible investing studies show a positive correlation between ESG standards and corporate financial performance. We at Cove Planning think if you can achieve your financial goals and make a positive difference in the world, then why not do both!

How to invest

There’s no shortage of ESG and SRI investments out there, and it’s important to understand the differences before you embark on your search. For investors trying to keep costs low, consider exploring passive Exchange-Traded Funds (ETFs) with a focus on ESG or SRI. Many asset managers also offer actively-managed mutual funds with an eye towards social responsibility.

Are you ready to learn more about how you can incorporate Socially Responsible Investing in your portfolio? Reach out to me at or schedule a free consultation call.

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Ben Smith is a Whitefish Bay, WI fee-only financial advisor and CERTIFIED FINANCIAL PLANNER™ (CFP®) Professional serving clients in the greater-Milwaukee, WI area as well as virtually across the country. Cove Financial Planning provides comprehensive financial planning and investment management services to individuals and families, regardless of location, with a focus on Socially Responsible Investing (SRI). Ben acts as a fiduciary for his clients. He does not sell financial products or take commissions. Simply put, Cove Planning sits on your side of the table, and always works in your best interest. Learn more how Cove Planning can help you Do Well While Doing Good!

Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Ben Smith, and all rights are reserved. Read the full Disclaimer.