Sustainable Investing: Aligning Your Portfolio with Your Values
Investing is all about making money, but it’s not just about making money. For many people, it’s also about making a difference. Sustainable investing is a way to align your portfolio with your values, by investing in companies that are making a positive impact on the world.
What is sustainable investing?
Sustainable investing, also known as socially responsible investing (SRI) or environmental, social, and governance (ESG) investing, is an investment approach that considers not only financial returns but also the environmental, social, and governance impact of the companies in which you invest. The goal is to invest in companies that are making a positive impact on the world, while avoiding those that are doing harm.
Why should you consider sustainable investing?
There are several reasons why you might want to consider sustainable investing:
- You can align your investments with your values
- You can make a positive impact on the world
- You can potentially earn competitive financial returns
- You can mitigate risk by avoiding companies with unsustainable practices
How can you invest sustainably?
There are several ways to invest sustainably:
- Invest in companies that are leaders in sustainability: Look for companies that are leaders in sustainability, such as those that have made commitments to reduce their carbon footprint, increase diversity and inclusion, or improve their supply chain practices.
- Invest in sustainable funds: There are mutual funds and exchange-traded funds (ETFs) that specifically focus on sustainable investing.
- Use ESG ratings: ESG ratings are a way to evaluate the environmental, social, and governance performance of companies. Use these ratings to identify companies that align with your values.
- Engage with companies: As a shareholder, you have the power to influence companies to adopt more sustainable practices. Engage with companies through shareholder resolutions or by voting in shareholder meetings.
What are the potential risks of sustainable investing?
Like any investment approach, sustainable investing comes with potential risks. One risk is that sustainable investments may not perform as well as non-sustainable investments. However, studies have shown that sustainable investments can be competitive with non-sustainable investments, and in some cases, even outperform them.
Another risk is that sustainable investments may be more expensive than non-sustainable investments. However, as sustainable investing becomes more mainstream, the cost differential is likely to decrease.
Sustainable investing is a way to align your portfolio with your values, by investing in companies that are making a positive impact on the world. By investing sustainably, you can potentially earn competitive financial returns, while also making a positive impact on the environment and society. While there are potential risks associated with sustainable investing, the benefits may outweigh the risks for those who are committed to making a difference.