Saagar Gupta, Fund Manager at SG3, on Sustainable Investing

Socially responsible investing, otherwise known as sustainable investing, can be defined as any investment strategy which seeks to consider both financial return and social and environmental good to bring about change. Since 2012 alone, this niche has grown to unprecedented popularity, seeing a 135 percent increase in assets under management to $8.72 trillion.

In spite of its tremendous reach, many are still unsure of what sustainable investing looks like in everyday scenarios, and whether or not it has genuinely made a positive impact on the world around us. With that in mind, let us take the time to explore this form of investing, as well as all of its highlights and drawbacks.

What are the goals of sustainable investing?

As previously mentioned, this socially-conscious method of investing aims to garner two separate results: social impact and financial gain. To give an example of how these mutually exclusive goals are reached simultaneously, let us consider community investing.

When individuals make donations to non-profit organizations that have a track record of social responsibility, they invest in the missions of these organizations — which could range from providing shelter to the homeless to after-school activities to disparaged children and teens. By improving the overall quality of the community, these investors and organizations subsequently boost the area’s economy, as more individuals are prepared to enter the job market and increase consumer confidence.

How is sustainable investing achieved on a larger scale?

Outside of one’s own community, it is possible to spark widespread change by investing in companies that advocate for clean energy, social justice, and environmental sustainability. Furthermore, one can commit to investing in exchange-traded funds (ETFs) that are backed by socially conscious entities, of which there are approximately 200 to choose from.

Surprising as it may seem, about 37 percent of such investment vehicles outperformed the S&P 500, making them a viable method of bridging the generational gap in philanthropy.

Who participates in sustainable investing?

Although it may seem as though this form of investing is solely reserved for the wealthy or the more mature, millennials are actually the most engaged in and concerned with sustainability efforts. In fact, a recent survey has shown that upwards of 84 percent of the millennial generation is twice as likely to invest in a stock or fund if it targets a specific global need.

Sustainable investing has clearly proven itself to be an invaluable asset to our society. After all, its reach is not only capable of inspiring change, but of breaking generational and financial barriers as well — all thanks to the diverse and accessible investment opportunities it affords.

Saagar Gupta is a fund manager for and founding partner of SG3 Capital, a small, private investment fund based in sunny Dorado, Puerto Rico. An MIT graduate, Saagar discovered his affinity for finance as he interned for Ascend Capital, well before he even began his college career. This experience, along with his passion for finance and trading, was the fuel behind his decision to start his own investment firm. To learn more about Saagar Gupta and his professional pursuits, please visit his website.