“I know how I’ll give. I’ll invest in the stock market”!
Who says this?
Investing is the last thing you think about when it comes to the word “giving.” What kind of company you should invest in is even farther from your mind. Yet, nearly 90% of people purchased a product because a company supported a cause they cared about.
Now, why is this important? It’s a reflection of the times.
People not only want a return on their investment, but they are now paying attention to how their investment impacts their community. Particularly in the age of increasing debts, it’s important people’s resources “kill two birds with one stone.”
How can you do this? Introducing Environmental, Social, and Governance (ESG) investing.
What exactly is ESG investing?
The most specific answer is in the name itself.
Environmental: How much does the company care about the environment? Does it encourage environmental sustainability (like the use of solar panels on their buildings)? Or has it encouraged harmful practices like tearing down forests?
Social: Does the company pride itself in tackling social issues like gender equality in their staffing process, for example. Or do they stay neutral on touchy subjects (or downright ignore them)?
Governance: Is the company’s management fair and proactive? In other words, do they care about you (the shareholder), or are they more concerned about their profits?
Essentially, ESG investing is putting your money into companies with high environmental and societal responsibility ratings as determined by external companies or research groups.
Why is this the new normal?
Well, we are living in a time where we can receive breaking news in a split second. With all of the media attention surrounding climate change and human rights, we as citizens are more aware about the world we live in. We also want answers. In fact, over 70% of people think CEOS should take the lead on a cause before the government mandates it.
Investing in companies that do not turn a blind eye to the world’s issues can be a big part of being the answer.
How can you play your part (if you want to)?
This is a considerable decision. Fortunately, investing today has never been easier. Before you invest, do make sure you look into companies that have a solid financial track record. Out of the companies, see which ones best represent what you care about. Don’t worry about this – external ratings take the guesswork out of finding this. If you are time-crunched or don’t know what to do, there are various robo-advisors who offer several socially conscious portfolios to choose from.
There you go. You are on your way to giving the world a more sustainable future all while rewarding yourself for it.