Sustainable Investing for a Better Future

What and Why

There's a variety of methods and types of green investing that can be discussed but for anyone just beginning to consider it, many of these investments typically fall into one of three categories Impact Investing, Socially Responsible Investing (SRI), and Environmental, Social and Corporate Governance (ESG).  These areas are growing in economic significance as consumers become more aware of the often hidden but incredibly harmful impacts associated with companies and products they regularly support.

Socially responsible investing makes sense. While there's still great strides fo be made it was found in a 2019 Global Impact Investing Network report that the emerging impact-investing sector doubled in size in just two years. Additionally, they found that impact investors say they will continue to invest in these areas. Numerous other studies have proven a positive performance of companies focused on areas related to ESG. One such study, out of Harvard Business School, found that stocks of companies with the strongest performance on ESG issues outpaced those with poor ESG performance. This positive correlation is more likely to result in long-term sustainable returns for both the investor and the company.

 

As industry leaders slowly start to make the transition it’s becoming apparent what’s good for the planet and people is good for business. As an investor, you can take part in the fruits financially while making vital improvements now and for future generations. Always think ahead. Think about the world that you want to create, because sure enough your dollars (whether through investing or just everyday purchases) are shaping the world.

Apps to help you invest responsibly

-M1 Finance It's easy to download the app, open an account, tap the research option and choose one of M1 Finance's socially responsible investing pies. These pre-made portfolios are ideal for investors seeking an easy way to invest in socially responsible corporations. 

-Axos Invest Within its Portfolio Plus Featured Portfolios, investors can access SRI portfolios targeting several categories. The SRI options include selections that focus on gender empowerment and sustainable energy, each creating a niche segment of SRI companies.

-Ellevest Ellevest Impact Portfolios invest in three sections of the SRI environment: companies with women in leadership, firms with higher standards for sustainability and ethical practices and companies that provide loans to support community services.

-OpenInvest The OpenInvest app only includes impact investing firms from the S&P 500 universe in its portfolios and chooses the companies after careful screening of socially conscious investment criteria. Unlike its competitors, the OpenInvest portfolios are comprised of individual SRI company stocks, not funds. 

-SoFi Invest SoFi Invest's Doing Good collection encompasses SRI stocks and ETFs. While SoFi's Doing Good collection of companies is less comprehensive than some of the competitors, the app, with its zero management fee and negligible $10 required minimum investment amount, makes it an ideal starter option. 

-Personal Capital known for its suite of free money and investment management tools. The firm uses ESG ratings to evaluate companies in its SRI portfolios. The SRI portfolios include the same underlying strategies as its core Personal Strategies, which include six major asset classes. 

-Betterment To create their strategy the firm analyzed all available low-cost SRI ETFs. Betterment found that large-cap U.S. stocks and emerging stock asset classes could easily be replaced with SRI-focused funds. Betterment chose to leave the other asset classes since the firm didn't find socially responsible options that were liquid or available at low enough fees.