How to Support the Greater Good with Your Investment Portfolio
If you’d like the opportunity to put your money to work for you while also supporting the greater good, you may be interested in sustainable investing. Sustainable investing, also known as socially responsible investing (SRI), is an investment approach that seeks to align an investor’s portfolio with their values and goals. The goal of sustainable investing is to create positive social and environmental impact while generating financial returns. In this article, we will explore the concept of sustainable investing and provide guidance on how you might align your investment portfolio with your values and goals.
What is Sustainable Investing?
Sustainable investing involves investing in companies that have a positive impact on society and the environment. These companies are often involved in sustainable business practices, such as reducing greenhouse gas emissions, promoting social justice, investing in renewable energy, or other practices in line with the United Nations’ sustainable development goals. By investing in these companies, you can create a positive social and environmental impact while typically generating financial returns over time, too.
Understanding the Benefits
There are several benefits to sustainable investing. Firstly, it allows you to align your investments with your values and goals. For example, if you happen to be passionate about environmental sustainability, you can choose to invest in companies that are committed to reducing their carbon footprints. Secondly, sustainable investing can help you manage risk. By investing in companies that prioritize sustainability, you may reduce your exposure to environmental, social, and governance (ESG) risks. Finally, sustainable investing can generate financial returns. In fact, data indicates that sustainable investing strategies have achieved comparable or even better returns than traditional investment strategies over the long term.
How to Align Your Investment Portfolio with Your Values and Goals
If you’re interested in getting started, here are some tips on how to align your investment portfolio with your values and goals:
Identify Your Values and Goals
The first step in aligning your investment portfolio with your values and goals is to identify what those values and goals are. For example, if you are passionate about environmental sustainability, your goal may be to invest in companies that prioritize sustainable business practices. For assistance in clarifying your values and which of them mean the most to you, check out these six values exercises from Psychology Today.
Research Sustainable Investment Options
Once you have identified your values and goals, you can research sustainable investment options that align with those values and goals. There are several investment vehicles that specialize in sustainable investing, such as exchange-traded funds (ETFs) and mutual funds. It will be helpful to work alongside a financial advisor to learn more about which options may be right for you.
Evaluate the Sustainability of Companies
When evaluating the sustainability of companies, it’s important to look at factors such as their carbon footprint, social responsibility, and governance practices. There are several third-party rating agencies that evaluate companies based on their sustainability performance, and this is an area where a financial advisor can offer assistance, too.
Monitor Your Portfolio
Once you have invested in sustainable companies, it’s important to monitor your portfolio to ensure that the companies you have invested in continue to prioritize sustainability. Regularly reviewing your investments can help you identify any changes in the company’s sustainability performance.
Are You Interested in Learning More?
By choosing to invest in companies that prioritize sustainability, you can create positive social and environmental impact while often generating financial returns, too. To align your investment portfolio with your values and goals, it’s important to identify your values and goals, research sustainable investment options, evaluate the sustainability of companies, and monitor your portfolio. With a thoughtful approach to sustainable investing and an assist from a financial advisor you trust, you can create a positive impact on the world while working toward your financial goals, too.
Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.
