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Making Your Ownership Count with Shannon Foreman

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What is the definition of Sustainability?



Simply put, it’s the means meeting our own needs without compromising the ability of future generations to meet their own needs.


So, this week as we continue our series of Sustainable Investing on the Thrive For[e]ward podcast, we will be talking about fixed income and proxy voting. Both are unique to sustainable investing and areas that are not typically talked about in depth.


First let’s breakdown the fixed income…


Much like the greater purpose of sustainable investing, the fixed income (bonds) portion looks specifically at spaces of impact within the organizations it’s supporting, or what you are investing in. Fixed Income is a type of investment that pays investors interest payments until it’s maturity date. Municipal and corporate bonds are the most common types of fixed-income products – these are the types we are most used to seeing in our portfolios.


The different thing about fixed income in a sustainable portfolio is the impact that is made with them. They are often actually referred to as impact bonds or green bonds. The companies that these bonds support have a greater transparency about their impact to the communities that they are investing in and how the actual funds are utilized to make a difference.


According to two new reports from Morningstar, the universe of environmental, social, and governance bonds has tripled in the past three years, reaching a total of $350 billion and in 2020, ESG bond assets rose 66 percent, far outpacing the overall fixed income universe’s growth of 12 percent.


Within the ESG bond space green bonds are the most popular to create investment with impact. Green bonds raise money that are dedicated to a specific project associated with betterment of the environment.


It’s important to remember that there is a purpose behind every single type of investment strategy.


In the bond market each bond has a rating or grade. It tells the investor then the ability of the company or issuer of the bond how likely based on their financials to be able to pay the interest and principal back to the investor. The higher the rating the more likely they will be able to fulfill their obligations. If you want less risk associated, then you want to lean more towards a higher rating or what we refer to an investment grade bond.


And now, let’s talk about Proxy Voting and why it’s so important that you understand how this voting can make impact. Most investors actually give up their rights to their investments firms to vote on their behalf.


All shareholders in publicly traded companies are entitled to vote. Your proxy vote mean you have the ability to vote for the motions the company puts before their board of directors aka changes to the companies structure, processing, compensation, etc. Not every company might listen to you individually but when you have the backing of a sustainable investing firm, they might listen a bit more – there is power in numbers.


When you are an owner of many stocks, this is where proxy voting comes into play. You most likely have allowed someone to vote on your behalf (such as an investment firm).  If you give up your proxy vote up to an investment company they might not challenge on the topics that you would or align with you.


Make sure whoever you delegate your proxy vote to aligns with what is important to you and ensure there is transparency so you can see the things they are doing to create the change.


We hope you continue to join us on this series of Sustainable Investing and invite you to schedule an appointment to our complimentary 30 min Wealth Assessment session to learn more about how we incorporate these strategies and other’s to assist you through the financial planning process.

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. Any of the parties listed above are not affiliated with Forethought Planning, Advisor’s Pride, or LPL Financial. 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.

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