A (Brief-ish) History of ESG & Sustainable Investing
Values alignment in investing traces its origins back centuries to the religious teachings of Judaism, Christianity and Islam. Recent evolutions of sustainable investing have been largely in response to more secular social movements, often in partnership with religious organizations.
By 1774, Quakers who owned slaves were disallowed from membership in the Society of Friends. Meanwhile, Methodists were following the teachings of John Wesley and his sermon on “The Use of Money” which lay the foundation for modern-day exclusionary investment screening by advising his followers to avoid any business practice that could do harm to your neighbor and to avoid industries that harmed workers.
Fast forward to the 1950s when investors began to avoid so-called “sin stocks,” i.e. alcohol, tobacco and gambling. This divesting framework paved the way for socially minded investors of subsequent generations.
Anti-War & Civil Rights Movements
The 1960s brought larger-scale politically driven socially responsible investing as student groups, civil rights organizations, and environmental and labor movements agitated for economic, social and environmental issues including boycotts of companies that manufactured weapons of war and demands for universities to divest their endowments of defense contractors.
The Environmental Movement & Anti-Apartheid
The 1970s saw Earth Day being celebrated for the first time followed by the passage of landmark environmental and consumer protection legislation. As society reacted to the world’s ills by demanding change, corporations divested and investors paved the way for new funds to be created that combined financial goals with social and environmental responsibility.
Exxon Valdez and Chernobyl disasters created existential crises about the environment and human activity causing its destruction. The United States Sustainable Investment Forum is established in 1984.
The Domini Social Index (which is now the MSCI KLD 400 Social Index), is established to dispel concerns that SRI investments would not perform as well as traditional investments. The Index was comprised of 400 U.S. publicly-traded companies that met certain social and environmental standards.
The United Nations Principles for Responsible Investment was launched, establishing guidelines for mainstream investors to incorporate ESG (environmental, social and governance) into investment practices.
The fossil fuel divestment movement gains traction.
ESG begins to grow in popularity as an integrated approach, compared to traditional SRI negative screens.
UN Sustainable Development Goals backed by all 193 UN Member States, are an urgent call to solve the world’s most pressing development challenges.
This is when our company’s history begins.
YourStake.org is established as a Public Benefit Corporation to provide the clearest, most transparent, most personalized data on social and environmental impacts of investments. We focus our tools on empowering wealth advisors, who are the trusted guides in any investor’s sustainable journey.
2020 to Present
Sustainable investing reaches $17T in assets in 2020.
ESG and SRI investing have quickened in pace in response to the The Covid-19 Pandemic and Black Lives Matter movement. The national reckoning on systemic racism and its links to our economy, alongside the accelerating impact of climate change brings more urgency to find solutions to the worlds largest problems, putting ESG and SRI into mainstream conversation.