Two new styles of investing have exploded in the past five years.
Responsible products marketed as ‘ESG’, ‘SRI’ or ‘Impact’ investments have become wildly successful, with global asset managers racing to classify trillions of dollars worth of assets as socially or environmentally friendly.
Alternative investing products, like Crypto, NFTs, wine, fine art, and novelty stock market investing have similarly captivated a huge audience of investors.
It might seem like these two categories of investment address very different needs — ‘ESG’ type investments were created by the institutional financial management industry and are intended for passive investors saving money with minimal risk. Alternate investments are patronized by fanatics and often involve huge risks. How could they be related?
We see alternative and responsible investing as two sides of the same coin. Here’s why: both are motivated by the feeling that traditional investing is too complicated for the average person to understand. Many investors believe that the financial industry has deliberately introduced these complications to stack the deck against them.
Millennial Investors came of age during the financial crisis of 2008-2009. The subsequent fallout experienced by normal people and bailouts lavished upon financial titans created a deep sense of cynicism that is echoed in popular economic attitudes to this day.
Responsible and alternate investing products both thrive on this cynicism. Of course, crypto enthusiasts' edgy commentary and intellectually driven subcultures are openly contemptuous of Wall Street. The motivations of responsible investors are more subtle, but are driven by the same cultural trend.
Both genres share the feature that they help investors understand where their money is going. Some alternative investments are sophisticated and abstract, but their patrons take pride in researching how they work. They are often supported by online common interest communities. Responsible funds give assurances that their investors will not be invested in environmentally and socially corrosive industries like oil and tobacco and advertise the positive benefits investors might inspire by participating in them.
At Legends Solar, this insight helped us create one of our core principles: Know what you own. We design our solar investments to give users an intuitive sense of what they invest in and how they impact the world. Solar panels are incredibly well suited to this task — they generate project performance data in real-time — and on Legends, we use it to create beautiful and intuitive visualizations and metrics.