How To Invest With A Conscience

Conventionally, what matters to investors is the profits they make from their investment portfolio. There is this belief that investing responsibly and making profits are mutually exclusive. But nothing could be further from the truth. There are many socially responsible funds and investment platforms that are delivering decent returns on investment.

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Investment doesn’t have to be about money alone. You don’t have to pretend as if the social impacts of companies don’t matter to you. You can invest with a conscience.

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If you are investing in individual companies, you can dig deep to ensure they are following a sustainable approach. If you are going the mutual fund route, they offer ESG investment options you can key into. What is more, there is a new generation of investment platforms whose sole purpose is to help you invest with a conscience.

What is ESG Investing?

ESG stands for Environmental, Social, and Governance. It is used to refer to socially conscious investments, projects, and companies. The three factors cover issues such as pollution, human rights, diversity, employees welfare, and so on.

Simply put, ESG investing is a value-based investment. You consider your beliefs, values, and principles before you invest.

Investing With a Conscience – the Options

There are several options to enable you to put your money where your values lie. There is mutual funds option and other impact investment opportunities. And if you want to invest in individual companies, there are stock research firms that will provide you with ESG-ratings on companies you are interested in.

Socially Conscious Mutual Funds

These are mutual funds that screen out companies that don’t care about ESG issues, for example, adult entertainment, tobacco, alcohol, firearms, and so on. They practice socially responsible investing. But before you invest in any mutual fund, it pays to check out the companies in their portfolio to establish if they align with your values. Usually, you can invest in these type of funds using a full-service online brokerage.

ESG Investment Platforms

ESG platforms are dedicated to ethical investment leveraging the power of technology. You can invest in stocks in these platforms without flouting your principles or going against your values.

Some of the portfolios you will find in these investment platforms are clean water, green energy, disease control, and so on. It is important to note you’ll be charged a higher fee compared to investments with traditional investment strategies. This is because they have a team of specialists dedicated to carrying out a thorough research on these companies to ensure they meet ESG criteria.

In Conclusion

Investing with a conscience doesn’t mean you have to sacrifice your financial goals. As revealed in this article, there are several mutual funds and investment platforms that are socially responsible and take ERG factors serious. Take advantage of them.

In the long run, socially conscious companies are more sustainable and have a competitive advantage. For instance, companies who treat their employees and are involved in environment-friendly causes are more likely to attract and retain top talents. These are things you should think about as you weigh your investment options.




About the Author

Ankur Shah
Ankur Shah is the founder of the Value Investing India Report, a leading independent, value oriented journal of the Indian financial markets. Ankur has more than eight years of equity research experience covering emerging markets, with a focus on India and South East Asia. He has worked as both a buy-side investment analyst for a global long/short equity hedge fund and a sell-side analyst for an emerging markets investment bank. Ankur is a graduate of Harvard Business School. You can learn more about his latest views on global markets at the Value Investing India Report. -- He can be emailed at AnkurShah47@gmail.com