This year, responsible investing strategies may provide you the opportunity to better yourself and your community.
Responsible investing is an umbrella term used to describe any sort of investment that looks at environmental, social and governance (ESG) factors when making an investment decision. For example, some investors have environmental concerns, and others want to find ways to help economically under-developed countries grow. Some may be looking for ways to help feed the world, and others want to improve educational opportunities globally. All fit into the category of responsible investing, and allow investors to choose ways to make a change through their investments.
There are three approaches you can take to your responsible investment goals:
Withdraw support from securities issuers with characteristics that don’t match your values. This is an activity many investors choose first, but discover it’s difficult to be universal with an investment stance from company to company. For example, if you would like to remove companies that make, use, transport or service the development of fossil fuels, you may also want to extend your list to include any company that uses fossil fuels to distribute their products from factory, to store, to your home.
Seek leaders among securities issuers that support environmental, social and governance (ESG) factors. ESG investing allows investors to financially support companies making strides to better any or all of the ESG factors. Investors also have the opportunity to advocate, as shareholders, for changes with companies that don’t meet the desired ESG factors.
Fund change through impact investing. The goal of impact investing is to generate positive, measurable social and environmental impact along with a financial return on the investment.
You may discover you fit perfectly in one of the three styles for responsible investing, or need a blend of all three styles to best fit your portfolio and interests for achieving positive change in your community, the nation and around the world.
If you are interested in exploring how to incorporate your values into your portfolio decisions, ask your financial advisor about responsible investing strategies. There are pros and cons to each style, and because every investor has unique goals and investing choices, there is no set formula to follow.