Words by Kristen Lunman
Did you know our investment decisions can also be a powerful lever for change?
Sustainable investing is growing in popularity and is all about choosing to invest in companies and sectors that seek to solve the world’s biggest challenges, from racism to pollution.
It’s easier than ever to consider the kind of change you want to see in the world and then put your money where your morals are.
For example, if you’re worried about environmental issues or climate change, you might look for companies or funds that focus on renewable energy or clean technology.
If gender diversity is important to you, you may want to invest in companies leading the way with females at the top.
Sustainable, also known as socially responsible, investing follows criteria to make sure money is funnelled into companies that promote positive social and environmental outcomes while also looking to deliver good financial returns.
The wealth industry is under pressure from investors, employees and activists to use their influence and smarts to fight climate change or address LGBTQ rights or governance on equitable compensation, and women are key in leading this movement!
Studies have shown that women are twice as likely to factor in socially responsible factors when investing our hard-earned money.
The myth that sustainable investing means sacrificing returns has been well and truly busted.
Many socially responsible investments have impressive track records of double-digit gains over the past few years.
Human behaviour is changing when it comes to things that we know harm ourselves or the Earth.
Smoking is dropping off, and younger people are drinking less alcohol.
People are moving away from petrol cars to electric vehicles.
When consumers move away from these types of sectors, less money flows into them.
When less money flows into them, businesses can’t reinvest and innovate (both critical factors to choosing solid investments over the long term).
We know it’s just good business to consider reducing carbon footprints, support employee diversity, and foster good governance practices.
Socially responsible exchange-traded funds (ETFs) have grown massively in popularity, with 2020 dubbed “the year ESG came of age” so it’s easier than ever to invest for profits and purpose.
ETFs are funds listed on the share market and allow investors to buy a basket of company shares with a single purchase.
They’re a straightforward and relatively low-cost way to get instant diversification (spreading your risk).
Conduct an online search for popular socially responsible ETFs, and you’ll find dozens that support the future you want to see.
If you prefer to invest in company stocks, consider those on the cutting edge of making the world a better place.
Don’t forget to learn about the business’s vision and mission to ensure it aligns with your values and beliefs.
Do the companies you back have good environmental, social and governance practices?
If not, have your say! As a shareholder, you can use your vote to help make a difference in how a company is run.
Gone are the days when we had to shrug off concerns about people and the planet when it came to putting our money to work.
Modern approaches now allow us to support companies that have a positive impact on our Earth.
So, what are you waiting for?
There’s never been a better time to make your money work both for your pocket and the planet.