We invest because we want to plan for the future and are hoping for a better, wealthier tomorrow. What has changed over the years is what we consider wealth. Wealth is no longer solely monetary. We also strive to grow ourselves, our communities, and the environment. When investing sustainably, you have the potential to create positive change on multiple levels. Here are 3 ways your socially responsible investments can have an impact:
Support good companies
Positive company engagement
Shareholder engagement
1. Support good companies
This means investing in companies that are rated highly in terms of environmental, social, and corporate governance (ESG) factors. These factors may include a company’s carbon footprint, environmental impact, diversity of their leadership team, privacy and data security, and thousands of other data points.
2. Positive company engagement
As owners of large quantities of company stock, fund managers have the opportunity to directly engage with company executives in order to raise issues that are important to their investors. In many instances, fund managers are able to encourage companies to create positive social and environmental change. Here’s an example:
3. Shareholder engagement
Shareholders in publicly traded companies are entitled to vote their shares on items that are presented for a vote at a corporation’s annual general meeting. If you are an investor in a mutual fund or other investment vehicle that does not allow you to vote your proxies directly, it is a good idea to find out how the fund's proxies will be voted on your behalf. You can check to see whether your funds are voting according to socially responsible objectives.
These are three of the ways you can have a positive impact when you invest in a socially responsible fund. Thanks for following along on our series around social impact investing! You can find our other posts here.