New to Ethical Investing? Here are a Few Proven ESG Strategies – Putting your money to work for a better world is one of the most effective ways to make an impact. Ethical investing is a strategy that allows you to invest while aligning your beliefs and values.
It’s not just about avoiding ‘sin’ stocks or companies promoting alcohol, gambling, or weapons – although many ethical investors will avoid those too. It’s about selecting companies with strong social, environmental, and governance standards based on personal beliefs and values.
If you aren’t already familiar with ESG investing, you might be wondering what it is and why so many people are talking about it. Even if you don’t have a huge amount of money to invest, there are plenty of ways to get started with ethical investing.
Read on to discover some ESG integration strategies for ethical investing.
Table of Contents
Establish Your Values
First and foremost, it’s important to know what you stand for. Ethical investing is much more than just ensuring you aren’t investing in certain industries. It’s about ensuring that the money you’re putting into the market goes toward companies and ventures you stand behind.
Ideally, when you’re investing ethically, you’re putting your money toward companies that have a positive social impact. When you have this knowledge, it’s much easier to weed out the bad actors and find companies that fit your values.
Invest in Companies That Align With Your Values
Once you’ve established your values, it’s time to use your investment dollars to support companies that align with those values.
This might sound obvious, but putting your money where your mouth is important. You have to decide which industries you want to put your money towards and which companies you want to support with your investment dollars.
For example, if you support animal rights and want to make sure your investment dollars are going towards that cause, you can invest in stocks that don’t test on animals, such as cosmetics and pharmaceuticals.
Use Index Funds To Invest in the Market, Without Supporting Bad Actors
There are plenty of ethical ways to invest in the market. One of those is to use index funds, which are funds that are made up of different stocks and offer diversification.
Index funds are a great way to invest ethically because you don’t have to worry about investing in specific companies or industries. You also don’t have to worry about supporting industries or companies that you disagree with.
Index funds are a great way to invest ethically because they expose you to the market as a whole while also ensuring you don’t support bad actors. This is a great way to start ethical investing, especially if you’re unsure of the industries in which you want to invest your money.
Do Your Research
Once you’ve established your values, it’s time to do your research. This is perhaps one of the most important parts of ethical investing since ethical investing is a great way to ensure your money is going towards companies and ventures you stand behind. However, you also want to ensure that these companies live up to their values and mission statements.
This is where you want to take your research to the next level.
You want to make sure that the companies you’re investing in are doing what they say they’re doing, and you want to make sure that they’re making a positive impact on the world.
Make sure to read up on company social responsibility reports (or SRI for short) and look for specific mentions of what the company is doing for the community. You also want to look at the company’s values and mission statements to see if they’re actually living up to their word.
The Bottom Line
When investing ethically, it’s important to do your research, avoid investing in industries you don’t agree with, and make sure you have a balanced portfolio. When you implement these ESG integration strategies, you can truly put your money towards companies making a positive impact on the world.
