5 Considerations For Investing In Socially Responsible Ways

There are many options available when it comes to investing your money. However, some investors may be drawn toward socially responsible causes and companies, often called environmental, social, and governance (ESG) investing.

If you’re interested in sustainable or responsible investing, here are five things to consider before you allocate your first dollar.

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Think About The Causes Most Important To You

When it comes to ESG investing, consider which causes are most important to you. If you care deeply about environmental causes, including companies that establish carbon emissions goals or are committed to using green energy, add those to your list to research before you invest.

If socially responsible policies like human rights issues matter, make that a priority as you deep dive into available investments.. ESG investing can be more meaningful if you choose the most important causes from your unique viewpoint.

Review Available Company Information

Before you make any investment, it is important to conduct your research. Read up on companies using their websites, publicly available reports, and information on their boards, executives, and overall corporate practices.

This fundamental knowledge will help you determine whether a company is a suitable choice for you to invest in.

Assess How Much Guidance You Want To Utilize

As with any investment strategy, you can opt to invest on your own (which means researching, creating a brokerage account, and selecting companies to invest in), or you can work with a company or broker to help guide your socially responsible investing (which means that they can manage the process

As with any investment strategy, you can opt to invest on your own (which means researching, creating a brokerage account, and selecting companies to invest in), or you can work with a company or broker to help guide your socially responsible investing (which means that they can manage the process in consultation with you and prioritize your ESG goals).

Depending on how much time and effort you want to put into the process, either option may help you achieve your investment goals.

Check Esg Scores And Rankings

ESG scores can measure how a company is progressing or succeeding against specific metrics. ESG scores can be compiled using company-released reports, publicly available information, and interviews with a company’s executives or management.

If you are using a company or broker for ESG investments, you can also discuss ESG scores with them.

Be Aware Of Greenwashing

Greenwashing occurs when a company exaggerates its ESG practices and impact to represent that it is more successful at achieving ESG goals than it actually is.

As with any research, investigating greenwashing (and raising the topic with your broker if you’re using one) can help you avoid investing in companies that may not be as aligned with your ESG commitments.

Align Your Investments With Your Esg Goals

ESG investing is one way to feel good about the causes your money is supporting.

Whether you choose to use a broker or go it alone, assessing these five factors can help you begin your ESG investing journey in a way that aligns with your financial and social responsibility goals.

Disclaimer: The above references an opinion of the author and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. Invest responsibly and never invest more than you can afford to lose.

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