Invest Your Values

My first jaunt into Socially Responsible investing back in my twenties paired nicely with my quest to cook healthy delving into recipes from The Moosewood Cookbook. My Dad lovingly called me his “tree-hugging, granola eating, stock picking daughter”.   I was willing to accept sub-par returns (I was young and had time on my side), along with eating less than delectable fare in my quest for nutritional value.

From investing your values to optimal food consumption – the tide has turned. Choosing satisfying, savory, safe cuisine as well as building ethically based portfolios is not only in vogue but an imperative to creating a sustainable world for all.  Organic Agroecology, regenerative and biodynamic farming techniques are becoming normative. Food production is not the only sector birthing new processes and products that are promoting positive world-wide transformation.

In the orchestra of the market – energy, technology, healthcare, real estate and others, every market sector is playing a different tune and people are listening.  When people like what they hear, they ask for more.   Retail investors, Institutional money managers, pension plans and foundations are buying and lending to companies that reflect a different worldview from the past.

Called by many names, Impact, Environmentally Sustainable, Socially Responsible, Conscious Capitalism, or Faith based Investing – all have as their core tenet a belief that business can do the right thing for owners, stockholders, employees, vendors, and the environment.  Free enterprise when done morally, is the best way to solve the world’s problems.  When done ethically, business brings us together to create value, lifting people out of poverty, creating agency to thrive in the human experience.  Our work is cut out for us, but capitalism can find its’ soul.

Historically, people have facilitated their social, environmental or faith based financial expressions through philanthropic donations and held the belief that market investing should focus exclusively on achieving a return on investment. The more you profit, the more you can potentially give away.  Should we question this assumption?  Is there is an inherent disconnect in this mindset? Think about it, you contribute to a cause, but a stock you hold inside your portfolio is profiting from and exacerbating the exact problem you want to solve with your charitable dollars.

Your money has a voice and how you invest it speaks volumes. You own shares in companies that produce products or provide services.  You invest financial capital in a business for their use or lend them money to support their endeavors.  Because investing has become easy and commoditized, we divorce ourselves from the underlying responsibility and ethical considerations. You review your statements – did the value go up?  You have been indoctrinated to compare your returns to market benchmarks as the sole metric of successful investing.  While profit is not inherently wrong, we need to ask ourselves – what is the true cost?  If we can make a reasonable profit while at the same time solving big world problems, doesn’t that net out a better overall result?

Where do you start?

Create the awareness.  Don’t abdicate your investing decisions.  Are there investments that you want to stay away from as a matter of principle?  Are there sectors or themes that you want to participate in as an expression of your values?  Asset allocation, diversification, tax efficiencies, and goal setting are all important. Add this additional layer of understanding and implementing your investment beliefs will serve you well in creating financial health.

Do your homework.  There is a wealth of information out there on financial tools to support you.  There are on-line screening tools that filter out or specifically select investments based on a variety of parameters.   Individual stocks and bonds, Exchange Traded Funds, Mutual Funds, Alternatives, Private Equity, Hedge Funds, Angel Investing, and Investment Clubs are a few of the vehicles on the road to integrating your beliefs with your investing.  Do your due diligence to find the right tool, technique and temperament that fits for you.

Shift your perspective.  You do not need to sacrifice returns.  Morningstar’s 2021 Sustainable Funds US Landscape Report notes  “Sustainable funds comfortably outperformed their peers in 2020, especially equity funds.” The returns of 69 percent of sustainable funds ranked in the top half of their Morningstar Category, and 37 percent in the top quartile returns. The report also compared the returns of ESG index funds to conventional index funds. Of 23 ESG index funds analyzed, 22 outperformed their relevant conventional index in 2020.

Build Your Team.  You don’t need to go it alone.  Ask your Financial Planner, investment advisor or your plan administrator what options they have to address your investment directives.  Can they personalize your portfolio to facilitate your desires? Let your voice be heard.   Make sure your team is aligned with your beliefs and are willing to walk alongside you to explore this new territory.

Take the first step.  You don’t need to reposition your entire portfolio in one sitting.  The same way you choose to forgo the candy bar, or decide to add more organic, locally sourced cuisine to your menu, start with small decisions that support your identity.  You have choices. You have a responsibility.  It is easier than ever to make small changes that will have big impact on your financial health now as well build your nest egg for the future that you and your family want to live in.

**Investing involves risk of loss that you should be prepared to bear.  No investment or strategy is free of risk.

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