Oct 30, 2020

Invest Your Values

Oct 30, 2020

Wealth Architects
Many of us have been sheltering in place for several months. Protests have sprung up around the country and the nightly news is flooded with election coverage and discussions of civil rights, police conduct, and institutional discrimination. Financial markets this year have been extremely volatile and each of us is coping with a lot of change and tension right now.

When we experience stress, we often get the impulse to “do something” to help relieve it. As citizens, we can vote for leaders who share our values. As capitalists, we can invest our money in companies that share our values. Indeed, aligning one’s investments with one’s values is a core piece of our work at Wealth Architects in our broader efforts to enhance holistic well-being for our clients.

Interested in reducing the greenhouse emissions from your portfolio? Want to divest from “Big Tobacco” or weapons manufacturers? Interested in supporting refugees or LGBTQIA+ rights? Want to invest in racial justice?

All of this is possible today thanks to what is known as Environment, Social, Governance (ESG) investing, which allows our clients to specifically address issues that are important to them by investing in specialized portfolios that are sensitive to environmental, social, and/or governance issues. We offer ESG portfolio options for our clients in our continued mission to enhance well-being beyond financial security. Let’s jump in and learn more about ESG investing.

Vote Your Values. Invest Your Values.

As our decisions at the ballot box reflect what is most important to us this election season, now may be an opportune time to help ensure that our money reflects the same. Building a values-based investment portfolio does not necessarily mean sacrificing financial returns. With the help of an increasingly diverse array of tools, we can strategically construct (or update) your ESG portfolio so that the risks are commensurate with a traditional portfolio, but the investments are curated with specific intention. A portfolio that generates financial growth while making a real impact is absolutely within reach and can lead to a greater feeling of fulfillment which enhances our well-being.

Investing Toward vs. Investing Away

Originally, ESG investments were designed to screen out companies and industries whose practices were at odds with the investor’s personal values. The primary objective was to invest away from businesses, such as divesting from companies that produce hydrocarbons or have opaque supply chains. Divestment continues to be an ESG staple. In recent years, however, ESG frameworks have evolved to facilitate a broader approach.

Indeed, ESG investors can be more positive and forward-thinking than ever before. Rather than only eliminating businesses they oppose from their portfolio, investors can focus on putting their money toward companies that exemplify ideals they care about. Examples include companies that provide jobs to the formerly incarcerated or have women in leadership positions.

Reporting the Non-Financial Returns

As ESG investment opportunities have become more robust, so too have tracking and reporting capabilities that measure non-financial returns. Just a few years ago, ESG reporting was relatively undeveloped and some investors found ESG impact hard to quantify. But now, thanks to more robust data sets, ESG investment vehicles can provide sophisticated, specific reports that quantify various non-financial aspects of portfolios.

Values & Investments in Harmony

Aligning investments with one’s core value system can bring expected financial returns similar to traditional portfolios while potentially creating meaningful impact in the world. It’s this impact that can give us a greater sense of well-being. Wealth management doesn’t have to be compartmentalized. However you choose to enrich your life and spend your time in the day-to-day – e.g. with family, volunteering in the community, enjoying nature, caring for animals, or traveling – can extend into where and how you invest your money. Synchronizing your life priorities with your investment priorities may reinforce the foundation of a more authentic, satisfying, and purposeful life.

In our aim to enhance our community of clients’ well-being beyond just financial stability, we see ESG investing playing an increasingly important role. It’s exciting to see our clients working toward both their financial and values-driven goals simultaneously. With hope, the future will provide even more options for our community to further deepen their ESG impact while still investing intelligently for their financial futures.

This post provides hypothetical examples only and is not meant to recommend any particular investment or product. Past performance is no guarantee of future performance.