7 Smart Moves for Socially-Responsible Investing

Marley Flueger

Investing is more than a way to grow personal wealth: it’s a chance to fund the future we want to see. And when it comes to investing in a sustainable future, there are more options than ever before.

Global assets applying environmental, social, and governance (ESG) data have more than tripled to $40.5 trillion since 2012 (OPIMAS, 2020). And these investments don’t just pay out in warm fuzzies: sustainable funds provide the same returns as their conventional counterparts. (Morgan Stanley, 2020)

Whether you’re new to investing or want to green your current portfolio, these eight tips can help your money do more - for you and our future.

1. Consult a (Human or Robo-) Advisor

If you work with a professional financial advisor, let them know you’re not interested in funding fossil fuels with your investments. Instead, ask them to consider ESG data as they develop your investment strategy.

You don’t need to hire a professional to make value-aligned investments. Consider using a personal finance app or robo-advisor service to find socially responsible options. Acorn, Stash, and Betterment all offer portfolios and individual funds that meet ESG criteria.

2. Investigate Before you Invest

Run buying opportunities through Fossil-Free Funds before making the leap. This website ranks individual mutual funds by their environmental records and financial performance, so you can make decisions that are wise for the planet and your pocketbook.

3. Green Your Retirement Fund

Saving for retirement isn’t always good for the environment. Less than 1% of the world’s largest pension funds and just 3% of 401(k) plans offer ESG funds as an employee investment option. Even so, there are steps you can take:

  • Learn: What does your individual pension or 401(k) support? Ask your employer for a rundown or contact your provider for a fact sheet.
  • Engage: Join forces with your co-workers to pressure your employer to offer cleaner options to everyone in your company.
  • Swap: If your employer can’t offer greener investments company-wide, opt for a self-directed fund and prioritize companies that score highly on Fossil Free Funds.
  • Advocate: Continue to advocate internally and sign Share Action’s Paris-Aligned Pension campaign to voice your support for clean investing, and encourage your coworkers to do the same.

4. Apply Pressure from the Inside

If you own shareholder stock in a major company, use that influence to vote for environmentally- and socially responsible directives and board members.

Hold interest in a financial institution? ShareAction coordinates with bank shareholders to file resolutions aimed at phasing out fossil fuel investments.

If you can’t afford a full share in a major company, you can still invest in groups using shareholder power to push them in the right direction. Humankind utilizes stock ownership power to drive positive change in powerful corporations with high potential returns for humanity.

5. Apply Pressure from the Outside

Even if you don’t hold stock in a company, your voice is a powerful tool. Use social media to share what you’ve learned, encourage others to switch banks, and apply pressure on key financial institutions.

6. Urge Your Organizations to Divest

Universities, faith-based institutions, companies, and even nonprofit groups often use their endowments and funds to make investments. Which organizations and communities are you a part of, and are your donations or membership dues helping to fund fossil fuels?

If they are, the good news is that you have a seat at the table to pressure decision-makers to divest. The Go Fossil Free Divestment campaign by 350.org has great resources to get started.

7. Support High-Impact Carbon Offsets

In the end, it’s impossible to completely eliminate your carbon footprint. Compensate for the emissions you can’t reduce by supporting groups who are reducing and removing carbon from the atmosphere. The carbon credits generated by projects we support are backed by evidence and analysis, and hand-picked to prioritize environmental justice.

Buy an Offset

8. Bank with the Planet in Mind

Responsible investing is important, but where we bank and borrow matters too! Our guide to sustainable banking will show you how to investigate your financial institution and get your money out of dirty fossil fuels.

Read 7 Steps to Sustainable Banking

Develop your climate action practice.

A climate action practice is the daily exercise of bringing awareness and intention to reduce the carbon emissions within your control.

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