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If you wanted to infuse your money in a socially responsible manner years ago then you were out of luck, but thankfully there are impact investing opportunities in the market.

The ESG investing definition means investments that follow environmental, social, or governance standards. This is also known as socially responsible investing (SRI), sustainable investing, or impact investing. No matter what you call it, this style of investing is becoming more popular, especially with Millennials. It combines high-profit investing with good moral standards.

Here are 5 reasons why ESG investing is here to stay:

1. Impact Investing Outperforms The Market

Yes, it’s true that socially responsible investments have been a safer bet than sin investments. Over the past 25 years, the MSCI KLD 400 Social Index has outperformed its benchmark by 0.06 percent annually. And this is not an isolated incident. Many funds have outperformed the S&P 500 for decades now, even if the average investor doesn’t notice it.

2. It Is In High Demand

As a result of the high performance, there is a growing demand for SRI investments. Numerous firms have seen a huge increase into impact investing during the last few years, with one firm saying that 10 percent of new money during the past year was for SRI.

The biggest push into SRI might be from Millennials. A 2017 poll from Morgan Stanley found that 86 percent of Millennials are interested in social responsible investing.

3. SRI Companies Follow Strict Criteria

In order to be considered a socially responsible investment, there is a list of criteria that must be followed first. Some of these guidelines include investments in firms that follow water conservation standards, encourage diversity on the board, or champion human rights. Each investment firm will have different criteria to determine if a particular stock meets these strict standards.

Companies that generally follow environmental or social standards tend to be successful. In fact, these SRI standards allow firms to screen out the bad investments and to focus only on the good ones.





4. Companies That Don’t Follow These Guidelines Might Be Shunned

One of the biggest reasons why impact investing is here to stay is because of public support for it. Consumers will tend to support those companies that follow SRI standards. In turn, consumers might also shun away companies that don’t follow these guidelines.

For example, in 2018 there were calls from young gun rights activists for investors to boycott investment management firms BlackRock and Vanguard because of their holdings in gun companies. This shows that young people don’t want to invest in companies that have questionable track records. Instead, they will support companies that have higher standards.

5. There Are Platforms Devoted To Impact Investing

Perhaps the most important reason that impact investing is becoming more mainstream is because there are platforms dedicated just to these types of investments.

One of the best examples is Swell Investing. The platform connects like-minded investors with high-growth companies solving global challenges. Swell Investing offers many portfolios such as renewable energy, green tech, clean water, and healthy living. And it only charges investors a 0.75 percent annual fee. In other words, if you invest $1000, it will only charge you $7.50 a year. Click here to get started with Swell Investing today.