Sustainable investment is an investment strategy that takes into account environmental, social, and financial returns. It is a way to shape the future of how companies interact with the world, the people they hire, and the products they manufacture. But how do you know if an investment is truly sustainable?The first step is to look for the fund family or different funds that an investment company manages and review their annual or half-yearly reports. This will give you an idea of their ESG (environmental, social, and governance) practices.
You can also use Morningstar's sustainability rating for stocks and funds, as well as their ESG indicator to seek out funds based on your own sustainability preferences. It's important to be aware of greenwashing, which is when companies or investments promote themselves as more sustainability-oriented than they actually are. To avoid this, you can look into ETFs (exchange-traded funds) that make sustainable investing more accessible and affordable than other types of mutual funds. However, be sure to check the fund's holdings to make sure it aligns with your values. You can also use tools like As You Sow's Invest Your Values search tool to learn more about your investments. Additionally, there are now more robo-advisors than ever that offer automated sustainable investment portfolios at no additional cost. Despite the enthusiasm for impact investing, only half of investors are actually involved in at least one sustainable investment activity.
So if you're considering sustainable investments, it's important to do your research and make sure it aligns with your values.
