Think ESG Investing This Earth Day

By Carolanne Chavanne, CFP®

Earth Day is on Saturday, April 22. Celebrate Mother Earth by taking the day to get outside, enjoy nature, and consider your role in your community.

We all want to make small changes to make the world a better place, and some of these changes can take place through your investment portfolio! This article discusses Environmental, Social, and Governance (ESG) investing, how to get started, and the difference it can make for both your investments and the environment. 

Discover ESG Investing

ESG investing is a strategy that allows investors to build a more ethical portfolio. ESG investments are very strict in what they include, and the criteria determining this classification are directly tied to a company’s structure and performance rather than personal values.

Here are some factors that are considered by each category:

Environmental

• Carbon emissions
• Air and water pollution
• Water usage
• Fossil fuel/green energy usage
• Deforestation

Social

• Employee diversity
• Customer satisfaction
• Employee protection
• Sexual harassment and protected class policies
• Fair labor practices
• Human rights

Governance

• Board member diversity
• Lawsuits
• Lobbying
• Executive salaries
• Conflicts of interest
• Shareholder rights

Investments can have an ESG score that determines how well they adhere to the given guidelines and consider the above factors.

The Rise of ESG Investing

Although the jury is still out as to whether or not ESG investments outperform non-ESG investments, ESG investments have become more and more popular for investors over recent years. In fact, a recent report predicts that ESG-oriented assets under management will more than double to $10.5 trillion by 2026.^1,2

Plus, the diverse availability of different ESG investment funds may fit more directly with your values. For example, you can invest in a company that is championing green energy initiatives or one that is working to become carbon neutral or even carbon negative.

How to Get Started with ESG Investing

If you’ve decided that ESG investing is aligned with your personal goals and values, it’s easy to get started.

The first method is to examine your portfolio and include ESG companies. You can find ESG investments that align with your financial goals, risk tolerance, and personal values by doing your research. ESG investments can include both individual stocks and mutual funds.

Another option is to work with a financial advisor who has experience with ESG investing. Look for an investor who believes in being a good global citizen through their business practices and the investment options they offer their clients.

From recycling and cutting out single-use plastic to cleaning up the streets, parks, and beaches by your house, there are many ways to get outside and celebrate Earth Day. ESG investing can be a lasting strategy to help you create a portfolio that reflects your values. As we grow as a global community and educate each other on ways to protect our planet, we will likely see an even more dramatic increase in ESG investing.

1. https://www.forbes.com/sites/qai/2023/02/16/esg-stocks-what-is-esg-and-do-esg-stocks-outperform-the-rest/?sh=1befc3f47f36
2. https://www.forbes.com/sites/joanmichelson2/2022/11/18/esg-investing-is-soaring-what-does-it-mean/?sh=19e283d351bc

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.