Values-based investing

2 MIN READ | #blog

We live in the age of customization. We can tailor our playlists, our newsfeed, and even create our emojis. Investing is no different, and there are more options than ever to reflect your personal interests — and beliefs — through your finances. 

Having an impact

Young professionals in particular want to invest their money in transparent ways that reflect their values. This approach goes by many names, including impact investing; values-based investing; and environment, social, and governance (ESG) investing. Regardless of the name, people are investing to create the change they wish to see in the world.

Impact investing has been surging in popularity, with ESG moving from the periphery to the mainstream. Money held in sustainable mutual funds and ESG-focused exchange-traded funds rose globally by 53% in 2021 — to $2.7 trillion — with a net $596 billion flowing into the strategy.1

To get started, it’s important to define your values. Many people are motivated to make the world a better place, but how do you measure your impact? Do you want to see more units of affordable housing available in your city? Are you passionate about supporting more minority entrepreneurs? Or do you want to fight climate change by reducing total global emissions?  Whatever your personal passion, there is likely a financial solution to address it, as long as you’re willing to look. More on that in a bit.

Investing your values

Once you have defined your goals, schedule a meeting with your financial professional. In the case of climate change, for example, you could discuss adding “green bonds” to your portfolio to support environmentally oriented infrastructure projects like wind farms. Conversely, you could opt out of fossil fuel investments because you don’t want your money going toward an emissions-intensive industry. Or you could do both.

It’s important to note, a financial professional will have a head start on the information about impact investments, but investors may need to be more hands-on to find the right fit that reflects their values. 

Spending for change

Perhaps the most direct way is to look at where you spend your money today. We make our values known through the businesses we support. For instance, B Corps, or Benefit Corporations, are businesses certified to “meet the highest standards of verified social and environmental performance, public transparency and legal accountability to balance profit and purpose.” The B Corp movement was started in 2006, and there are currently more than 4,000 certified B Corps around the world.2 By purchasing or working with a certified B Corp, you’re doing your part to support the business model as a whole.

However, you go about it, impact investing is an exciting area to investigate and a great opportunity to walk the walk. And if you invest with your values in mind, you’ll travel the road to financial confidence with the knowledge that you helped others along the way.

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