The Responsible Investor

Infrastructure Bill – What’s in it and who’s paying for it?

On August 10th, the U.S. Senate passed an infrastructure bill that included over $1 trillion in infrastructure spending. Both parties have been trying to come to a resolution on an infrastructure package since the Trump administration. However, it was only until recently that both Republicans and Democrats could agree. This blog post aims to give an overview of the type of spending in this bill, and how it may advance clean and sustainable infrastructure.

While the $1 trillion infrastructure plan that passed the Senate seems relatively high, it is approximately 50% less than the original $2.3 trillion infrastructure plan that the Biden administration proposed in the spring. Of the roughly $1.2 trillion in infrastructure spending, about half of that spending ($550 billion) is new dollars above the projected federal spending on infrastructure projects.1 

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The Responsible Investor

Impact Investing for Individual Investors

Many investors are becoming more conscious of where they allocate their money and want to ensure that they are investing their dollars in a way that won’t be a detriment to society.1 Some common ways investors can align their portfolio with their values is by investing in Socially Responsible Investments (SRI) and Environmental, Social, and Governance (ESG) mutual funds and exchange-traded funds. However, one of the lesser-known types of sustainable and responsible investing is known as impact investing. Impact investing has the potential for direct social influence because it is made with the intention of generating a positive and measurable social and environmental impact along with a financial return.2

There are unique differences between each of these three types of investing styles. SRI is a broad term that covers an investment strategy that actively includes or excludes investments based on ethical guidelines. A good example would be a fossil-fuel free portfolio that excludes companies that produce any amount of fossil fuels. ESG investing is a strategy that looks at the Environmental, Social, and Governance characteristics of a company as part of the investment analysis process. This type of strategy may look to invest in companies that have higher ESG scores than their peers or look to exclude companies based on lower ESG scores.

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The Responsible Investor

Investing in Affordable and Clean Energy 

The scientific community agrees that the earth is getting warmer and we are seeing more dramatic climate events because of this.1 However, the extent that humans are inducing global climate change is still being debated. Although there is still debate about how much humans contribute to global climate change, there is no doubt that we are more aware of our environmental footprint than before.

In 2012, the United Nations Conference on Sustainable Development created 17 Sustainable Development Goals (SDGs) that are aimed to meet environmental, political, and economic challenges. A number of these goals focus on climate change and developing a way to provide cleaner renewable sources of energy to every person in the world. By giving universal access to renewable energy, not only does it reduce our carbon footprint, but it also gives those who otherwise would not have modern energy services a higher standard of living. 

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The Responsible Investor

Diversity and Inclusion in Investing

Between a global pandemic that has cost trillions of dollars and witnessing protests against police brutality, this year has triggered many current events that are reshaping how we view the world. People of all races are starting to ask the tough questions about racial equality that many people may not want to discuss. Many investors are starting to figure out how they can position their investment portfolio to align their money with their values on racial equality.

Socially Responsible Investing (SRI) has been growing in popularity over the last decade. An increasing number of asset management firms are creating funds that either tilt towards companies that show a higher degree of diversity and inclusion among their workforce and boards, or are creating funds that exclude companies that don’t exhibit this type of diversity. Data is currently available that supports that having an equity portfolio that consists of companies that take diversity and inclusion seriously can actually boost performance. For instance, research from the Wharton School at the University of Pennsylvania showed that a value-weighted portfolio of Fortune’s list of best companies to work for based on opportunities, benefits, and diversity generated an alpha of 3.5% in the twenty-five years from 1984 to 2009, which was 2.1% higher than the benchmark.1

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