Responsible investing strategies can provide you the opportunity to better yourself and your community.
Socially 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, which allows investors to choose ways to make a change through their investment strategies.
There are three ESG investing strategies you can take to achieve your responsible investment goals:
1. Withdraw Support
Withdraw support from securities issuers with characteristics that don’t match your values. This is an ESG strategy many responsible 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.
2. Seek Ethical Leaders
Seek leaders among securities issuers that support ESG factors. When you support these securities, you financially support companies that are 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.
3. Use Investments to Fund Change
The goal of ESG impact investing is to generate positive, measurable social and environmental impact along with a financial return on the investment.
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. You may discover you fit perfectly in one of the three styles for responsible investing, or you may need to blend all three styles to best fit your portfolio and interests for achieving positive change in your community, the nation and around the world.
We Can Help
If you are interested in exploring how to incorporate your values into your portfolio decisions, ask your Farm Bureau financial advisor about responsible investing strategies.