Forethought Planning Podcast

Ep 90: Earth Day: How to Grow Your Portfolio While Caring For the Planet At the Same Time

April 19, 2022 Shannon Foreman Season 1 Episode 90
Forethought Planning Podcast
Ep 90: Earth Day: How to Grow Your Portfolio While Caring For the Planet At the Same Time
Show Notes Transcript

This week we are talking about Earth Day, and the theme this year is invest in our planet. I couldn't think of a better, more aligning topic to talk to you about than sustainable investing. 

This is truly investing in the future of our planet, in the future of our cultures, and in the future of us as a people. 

When it comes to investing in our planet, sustainable investing is something that has been around for decades. So if you are somebody who is celebrating Earth Day, or are a company that is celebrating Earth Day, share this with your team, share this with the people that are important to you, share this on social media, and with all of your extended friends and followers. Together we can really engage in a conversation that is about investing in our planet, and the future.

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Securities offered through LPL Financial, a member of FINRA/SIPC. Advisory services offered through Advisors' Pride, a SEC registered investment advisor. LPL Financial, Advisors' Pride, Forethought Planning and the guests of Thrive For[e]ward podcast are separate and unaffiliated parties. The views expressed here are those of the participants, and not those of Forethought Planning, Advisor's Pride, or LPL financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. LPL Financial and Forethought Planning do not offer legal services.   

Shannon Foreman  0:00  
hi friends welcome to the Thrive Forward podcast this week we are pausing in our conversations around what you should be thinking about in terms of different decades or life spans that you are a part of. And we're talking about Earth Day, I couldn't not talk about this when the theme birthday this month, which is Friday, April 22. The theme this year is invest in our planet. And I couldn't think of a better more aligning topic to talk to you about then sustainable investing. This is truly investing in the future of our planet in the future of our cultures in the future of us as a people. And I want you to consider it not only as the elements of what we should be doing from hugging trees, but also considering it as an element of progression as a society. Thinking about it from an equal pay standpoint, thinking about it from an element of maybe mitigating some levels of fluctuation, of course, any investments that we have, will provide levels of fluctuation. But when it comes to investing in our planet, sustainable investing is something that has been around for decades, in fact, since the 70s. And so if we really want to consider what it means to invest in our planet, then we can't leave off the topic of sustainable investing. So if you are somebody who is celebrating Earth Day, or are a company that is celebrating Earth Day, share this with your team, share this with the people that are important to you share this on social media, with all of your extended friends and followers so that we can really engage in a conversation that is about investing in our planet. And the future, let's dive into the good stuff. A faux pa of the past that we may have some ascribe to was that we would have to sacrifice rates of returns in order to think about other people and the companies that were invested in and whether they align with our personal beliefs, and how we want to see the world progress forward. The reality is no you don't of course, any investment that you invest in, doesn't have a guaranteed return, or any element of guarantee associated with it, any risk is associated with it. However, as we have seen over the last several years, especially more interested in sustainable investing, I want you to understand what it is what it means and what should you be looking for, and how to start having that conversation with your partner, or your financial advisor.

Shannon Foreman  2:53  
So let's dig into some of those things starting with what is sustainable investing. sustainable investing isn't just a buzzword, it's essentially looking at three critical components. And you can hear sustainable investing, socially responsible investing, ESG, investing, a lot of them are very interchangeable. There are different ways and different types of looking at sustainable investing in the sustainable investing of the past was just basically saying, if you're not doing this, we're not including you in the portfolio. And that simply isn't just the way that we do things anymore. There are several ways of looking at it. Perhaps there are some companies that are strong in one category, and maybe continuing to work on other categories. We don't want to eliminate them just because of those issues. So the three main categories that sustainable investing focuses on are the environment. So we talking about Earth Day, we're talking about investing in the planet, one of the biggest proponents of sustainable investing is how are we looking at the companies that we're investing in and what their carbon footprints are? What are their impacts to our world as a whole? How are they affecting the communities that they are in with their levels of pollution or not pollution? How are they a green company or not? How are they making sure that they are eliminating global climate change? How are they looking at those issues? And yes, every single company, every single human on this planet is responsible for looking at that. And so, environment is a huge focus of sustainable investing, and in fact, is probably the one that is most talked about. And the other two pieces are just as critical in bringing our world forward. But since we have focused so much on sustainable investing, and it's Earth Day, we'll probably target that a little bit more, but I want you to understand the other two aspects of things as well. Social change is the s in ESG and And lots of times we have been having these conversations, especially after the murder of George Floyd that rocked the world, not only just his family, but our communities. In fact, my community, the back door of my community, the community that I grew up in, it rocked our world. It changed us to have more of these conversations that, frankly, should have been happening for decades and centuries. But social change is around what is it that we are actually really doing? We saw so many companies after 2020, hashtag put promises out there of hiring and looking for diverse candidates, not only just people of color, but also women. How are we creating those sustainable workforces? So looking at it from not only what are we posting out there, what are we marketing out there? But what are we actually doing? Looking at employee surveys, looking at the actual things that are happening with the in the company? What does the Board of Directors look like? What does the form of that company look like? How do the employees feel, what levels of education How is equal pay being taken into account with all of those conversations, social change, I truly am very passionate about when it comes to sustainable investing. And I do think when we end up with achieving that basis, we are also moving the planet forward, the more diverse voices we have at the table, the better ability, we have to understand how we can embrace moving forward for our planet, as well. And the last big category is governance. So governance is thinking about the makeup, the legal aspects of the company, how are decisions being made? What does that look like from a data privacy standpoint, as well, as you know, a lie? I think that's a huge conversation, especially right now in the current environments that we live in. So much of our data is being shared across all different elements? And are we giving permission to being able to do that people are marketing to us without our knowledge. And that definitely impacts our wealth, and our concepts of behavioral finance as well. So how are we holding companies accountable to using data in the right way? How are they processing different things within their organization? From a hierarchy standpoint? What does that board of directors look like?

Shannon Foreman  7:38  
What are the things that are really important to us? And how are decisions being made? So often, we feel like we have these big, huge large companies, but we don't really have a say, if you own their stock, you definitely are an owner in their company, and you absolutely have a say, now some of that same may have been calculated to the firm that you work with, not your necessarily your financial adviser, but the broker dealer that you work with, and they can represent you or the portfolio managers, they can represent you. Are you aligned? Do those portfolio managers does that broker dealer, not just your financial adviser, but that extended team that that person has? Do they function in a capacity that is in alignment with your values? These are all important things, and very complex sometimes to think about. But let's start to talk about how can you start taking some of these things into your day to day life? Let's take a pause here. I feel like sometimes when I start to get on my soapbox around sustainable investing and can make some people feel very overwhelmed. The reality is any type of investing can feel very overwhelming. If you don't have the right team around you explaining how it works for you on an individual basis, understanding how that works with your financial plan, and ultimately, the goals that are really important to you. So let's take a pause. Maybe it's time for you to sit down and reevaluate the team that is surrounding you. We would love the opportunity to be that team for you at forethought planning. Simply go to board that backslash wealth assessment today so that we can start planning for you. I want to focus in on one big piece that we talked about what is it that we can do so we can start having the conversations with our partners, we can start having the conversation with our advisors on what is sustainable investing. Do I have anything that's a part of it, you can have this conversation with your HR individuals who manage the options that are available to you within your 401 K. If you are passionate about any of the topics that I discussed, whether it be the topic of investing in the planet social change data privacy All these different things, what options are truly out there for you? I think we all want to see the progression of us as a society, we want to see that the planet is here for the next generations to come. I think we might all have a different way sometimes of getting there. So this isn't a political issue, my friends, in fact, it's how do we bring everyone together to have a greater conversation and around making lasting true change? And some of that is not happening in our legislature, but rather happening at the director levels, boardrooms, and things that are happening within our investment firms. Let's put our money where our mouths are, if you want change, how are you adapting your wealth to be able to be invested in that same amount of change? Yes,

Shannon Foreman  10:47  
if you want to invest in the planet, absolutely. Think about using reusable bags. Think about doing responsible shopping, think about recycling, think about buying secondhand, think about solar panels, electrical vehicles, all of those different things. At the end of the day, some of those things are still going to need waste. So how are we truly changing as a society, we're either looking at where are these companies get the most amount of their money to create the next thing that they're going to sell us? Well, they get it by our investments in them. And so thinking about that, from a perspective of if we're buying into these companies, these companies are essentially growing, right? That's what happens when we purchase their stock, their stock price goes up. The stock market is essentially just a big popularity contest, I say this quite frequently and sometimes get beside a, but it is whatever is out there. That is the popular thing since sliced bread or the quote unquote, reliable thing. That's the thing we're going to lean into. But the reality is, if we want lasting change, how do we start to create accountability? One of the really cool pieces of sustainable investing is shareholder accountability. Yes, I know that kind of sounds like a big phrase. But when you look at it, as an investor, as I mentioned, you are an owner in that company, you get a say, at the board of directors meetings, you get to vote. And if you're a minor shareholder, there is likely that the broker dealer or the investment firm that you invest with is going to represent you. Maybe you've received a proxy vote before in the mail, this is what I'm talking about. That being said, you don't want to just ignore that that's something that you want to be knowledgeable on, what are the things that are happening, and that's how decisions get made. That's how the accountability happens. In fact, many of the firm's that we partner with in our sustainable portfolios actually sit down and have these conversations with some big companies about creating change around equal pay around green energy around being able to limit the carbon footprint that we have, so that we can have the elements that make our air more breathable, our ice caps not melt the next generation really to have a planet to live on. I'm a mom, I have two young girls, it is something I'm very passionate about being able to make sure that they have somewhere safe to live. That isn't and it is a very real issue. My friends, we can't ignore it. It's science. And so how do we hold people accountable? I love reusable bags. I love electronic vehicles, I love solar panels. I love all of those things. I

Shannon Foreman  13:40  
love composting, Jim does not love composting, so it doesn't happen as frequently as I would like to in our house. But those are elements that we can think of. And we all have these personal opinions on how we invest in our planet. But the reality is where money is money makes decisions happen. And money makes movement, if we all started to look at our portfolios and invest in sustainable companies, man, how we could power forward investing in our planet, putting our money where our mouth is. So how do you start to have that conversation? I think it's important to be able to lay out what are the things that are important to you. These are the topics that are important to me, I talked about it at the beginning, we actually have a whole month from October of 2021, where we break down sustainable investing, and there are a lot of different topics that you could educate yourself on and then go to have this conversation with your partner, go to have this conversation with your financial advisor. I also want you to understand that not every financial advisor is going to understand sustainable investing. So this is something that you want to do. You also want to make sure that someone has experience in this area. And at the end of the day, if this is something that's really important to you, it's okay to shop around for somebody that is is going to understand what it is that you want. Maybe you have a partner that might be a little bit more resistant to it, I want you to understand those accounts that are in your name, you get the choice of being able to understand what the risk tolerance is and how those monies are invested. You don't have to subject yourself to somebody else's opinion. That being said, I understand that you're probably in partnership with them. And you don't want to rock the boat too much. Maybe having that values based conversation first, and then initiating conversation and saying these things are important to us. What if we invested in companies that we're thinking about the planet, not just in what they market, but in the actionable items that they actually do? Have them listen to this podcast, have them listen to the podcast that we play back in October of 2021. That being said, it might be something that would have to happen over time. Also, you want to take into consideration any taxes that might take place from liquidating and making any changes to your portfolio. So also make sure that you're involving your personal board of directors and any of those decisions that are being made. Ultimately, I do think we as a people have great power to make change. I think it's just us, stop subscribing to the popularity contest and start thinking about what it is that we want to do, how we want to invest our money and how we want to create change and start holding companies responsible to making those decisions and moving forward and an element that allows all of us to thrive. Because ultimately, I believe all of us are worthy of wealth, not just a select few. So if we want to be able to create lasting change, let's put our money where our mouth is. And remember my friend you are worthy of well. The views expressed here are those of the participants and not those aforethought planning advisors, guide or LPL. Financial all investing involves risk including loss of principle, no strategy assures success or protects against loss securities are offered through LPL Financial and member of FINRA and SIPC advisory services offered through advisors pride and SEC registered investment advisor LPL Financial Advisors pride forethought planning and the guests of the Thrive Forward podcast are separate and unaffiliated parties

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