Weekly Market Commentary, January 31, 2022

“Sustainable Investing Year in Review”

Jason Hoody, CFA, Head of Investment Manager Research & Sustainable Investing Research, LPL Financial


February 4, 2022

Dear Friends and Clients,

This week LPL's Research team tackles sustainable investing, or what is sometimes called socially responsible investing.

I have a few thoughts on this topic.  I am a little reluctant to share them.  It is a minefield.

In an earlier time in my life while serving on Korean DMZ as a newly minted Infantry Lieutenant, I did in fact inadvertently wander into a minefield.

It was not the least bit disconcerting.  I was calm as can be.

Then my predicament was brought to my attention by my very experienced and capable platoon sergeant.  Suddenly, I experienced a rush of intense emotions.  My nervous system was overloaded with cortisol, adrenaline and whatever other hormones are related to terror.

Freeze?  Flee?  Or abandon hope?  Wait to be rescued?  Fortunately for the men under my charge, I alone, fresh face butter bar that I was, was imperiled.

It is possible that North Koreans on the other side of the wire observed my predicament.  It they did, they were too polite to laugh audibly.  I did hear Korean deer barking in amusement.

My platoon sergeant expertly extricated me.  Nothing was said before or after.  I did not think it my little misadventure merited mention at the mission debriefing.  I noticed some of my PFCs in the back of the tactical ops center having difficulty containing a smirk or two.  Hard to blame them.

ESG investing is the hot button topic.  I support the idea that corporations have obligations beyond mere profit and shareholder value.  I agree there are other stakeholders to consider. The goals are worthy:  Avoid harm, have a positive effect on the public good, contribute to the solution of social problems.

The devil is in the details.  In a pluralistic society there are competing views of the public good. When does avoiding harm create unintended consequences worse than the harm avoided?  Just what marginalized communities are to be prioritized?  What about liberty?  When does the ESG tail wag the dog at the expense of innovation?

I am not an angel.  I have not met any.  I own some investments that some folks would disapprove of.  Others might approve of them.  The important thing is to have a robust and diverse conversation as a society.  I favor letting the investing public figure out what they do or do not want to own.  There is no one size fits all moral orthodoxy.  That said, we are going to be engaging these questions for a long time to come.  I just wish I had my old platoon sergeant around to sort out the best choices.

Disclosure:  The opinions voiced in this material are for general information only.  They are not the views of LPL Financial and are those of the author alone.  They are not intended to provide specific advice or recommendations for any individual. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio.  Diversification does not protect against market risk.

Have a great weekend ahead.  Stay safe, warm, and dry.  Avoid minefields, especially at family gatherings.  Keep a capable platoon sergeant on speed dial just in case.


Stephen R. Judge, ChFC CLU
Financial Advisor

LPL Financial  

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