Values Based Investing

Allowing you to invest in accordance with your sense of social and environmental responsibility.

At Hendershott Wealth Management, we offer fully managed investment portfolios that draw from Nobel Prize winning research and expertise.

As part of that offering, we also offer values based investing – what is known as ESG (Environmental, Social, Governance) investments. What makes these types of investment options attractive to investors is that they allow you to earn returns comparable to our traditional portfolios, while holding investments that are aligned with your own principles and values.

There are many ways to talk about values-based investing. We have adopted the acronym ESG, which stands for the following:

  • E: Environmental: The Sustainability portfolios focused on environmentally responsible investing
  • S: Social: The Socially Responsible Investing (SRI) portfolios
  • G: Corporate Governance: Implementing strategies to ensure the company is acting in the best interest of shareholders

The ESG portfolios we offer clients are not in conflict with traditional investing. Just think of Values-Based Investing as a way to carefully construct your investment portfolio to better align with your values.

Why Choose ESG Investing?

Different investors embrace ESG investing for different reasons. Your priorities govern which approach best aligns with your goals. 

The bottom line is that ESG investing gives you more choice over which investments you hold (and which ones you don’t).
 

  • If your priorities are financial: Some investors may not focus on investing “morally,” but may do so anyway if they believe companies with higher ESG rates will deliver higher returns.
  • If your priorities are about impact: Others may not care whether ESG investing translates to higher or lower returns, as long as they can shun “bad” companies and invest in “good” ones.  
  • Blended priorities: Most investors fall somewhere in between. They want to earn solid returns, or at least not lose money, while investing in principled ways. This is where we have focused our offering. 

Why Choose ESG Investing?

Different investors embrace ESG investing for different reasons. Your priorities govern which approach best aligns with your goals. 

The bottom line is that ESG investing gives you more choice over which investments you hold (and which ones you don’t).
 

  • If your priorities are financial: Some investors may not focus on investing “morally,” but may do so anyway if they believe companies with higher ESG rates will deliver higher returns.
  • If your priorities are about impact: Others may not care whether ESG investing translates to higher or lower returns, as long as they can shun “bad” companies and invest in “good” ones.  
  • Blended priorities: Most investors fall somewhere in between. They want to earn solid returns, or at least not lose money, while investing in principled ways. This is where we have focused our offering. 

What Kinds of Values Based Investments (ESGs) Are Available?

We offer two different types of ESG Investments at Hendershott Wealth Management. All ESG options are based on strategies that are evidence-based, broadly diversified, based on sound investment principles, and efficiently implemented. In all cases, the guiding light of these efforts has been to achieve the dual goal of taking into account your values and considerations while also building robust investment solutions expected to grow for future consumption.

Sustainability Investing

We offer a science-based approach to Sustainability Investing as a way of providing effective investment solutions to clients who are highly conscious of the environmental impact of their investments.
 

  • The resulting strategies systematically evaluate sustainability metrics among companies across all major industries, excluding or penalizing companies that rank poorly while emphasizing companies with higher sustainability scores.
  • The primary focus is on the greenhouse gas emissions intensity of each company.
  • The consequence of this approach, at the industry level, is to shift capital away from companies with the worst scores toward companies with the best scores.
  • Using both proprietary and third-party data, we are able to include both current and potential emissions in the rankings system, thereby significantly (if not completely) reducing your exposure to companies emitting greenhouse gases either today or in the future.

Socially Responsible Investing (SRI)

Our social investment funds seek to exclude individual companies that are involved in controversial activities while preserving investors’ ability to pursue higher expected returns across stock and bond markets.
 

  • Social screens include: abortions, abortive agents, contraceptives, adult entertainment, child labor, gambling, landmines and cluster bombs, the Republic of Sudan, stem cell research, tobacco or alcohol and weapons.
  • The screens established by our funds have taken into account the US Conference of Catholic Bishops (USCCB) Socially Responsible Investment Guidelines, among other factors.
  • We evaluate companies historically. If any subsidiary fails one of our screens, that subsidiary and all other subsidiaries of the parent entity are excluded.
Introducing Values Based Investing by Hilary Hendershott. We have socially responsible investing portfolios, environmentally responsible investing portfolios and portfolios focused on responsible corporate governance.

How Do I Use Values Based Investments (ESGs)?

ESG Investments are designed to be implemented in a complete portfolio. For example, many of our clients choose either an SRI or Sustainability in their pre-tax portfolio while maintaining a traditional portfolio in their after-tax portfolio. You could choose any combination of two of these – Sustainability, SRI or traditional portfolios – to comprise your pre or post-tax investments.

There is no one-size fits all approach. As with every portfolio we construct and manage, we take into account all of your needs and values so that you can reach your financial goals and, in this case, do a little more good for the world in the process.

In addition to the Sustainability and SRI overlays, we offer significant resources dedicated to positively impacting how companies are run and the business lines and environmental impacts they are making. Both of the Values-Based Investing portfolios, as well as our traditional portfolios, embody significant Corporate Governance efforts. These efforts help ensure increasing diversity at the executive and board level, transparent business practices, equitable officer compensation, and consideration of shareholder interests in their strategic decision-making.

Wondering if Values Based Investing (ESG) is right for you? Contact us to discuss the next steps in aligning your portfolio with your values.