July 2019

It’s been said that the best way to determine if your actions are aligned with your goals and values is to take a close look at two things – your datebook and your checkbook. Because it’s how we spend our time and money that may be the best indicator of what’s truly important to us.

In a retail context, consumers have long been able to support socially conscious brands like Ben & Jerry’s Ice Cream and Whole Foods Market to put their money where their mouth is. The rise of socially responsible, or ESG, investing is making it easier to apply the same values-based lens to the funds inside your investment portfolio. Below, a look at this increasingly popular filter when it comes to investing.

Socially responsible investing, also known as ESG investing, refers to the three central factors—environmental, social and governance—that are used in measuring the sustainability and ethical impact of an investment in a company or business. Using that lens, individual investors and mutual fund designers are then able to include or exclude those companies inside their portfolios. Forbes provides history and context around the rapid growth of ESG investing in “ The Remarkable Rise of ESG. ” The term ESG was first coined in 2005, but the idea began in the U.N. in 2004. The rise of ESG has been neither smooth nor linear. Read the story behind this intriguing investing process.

Larry Swedroe, chief research officer and board member at Buckingham Strategic Wealth, recently took a deep dive into the world of ESG investing strategies. In his article “ Determining the Nature of ESG Returns ,” Larry concludes that while ESG yields no additional benefit, nor does it negatively affect risk-adjusted returns, it does allow investors to express their social view through their investments without any penalty in terms of risk-adjusted returns. This article will help position you to pursue your financial goals in the manner that reflects your values and the risks you are willing to bear to achieve those values.

Public companies are facing more scrutiny from a wide-ranging set of stakeholders. Often their corporate behavior and performance relates to sustainability. These expectations are reinforced by massive amounts of data that can now be collected, accessed, and acted on. According to Jon Hale, director of sustainable investing at Morningstar, he feels this is leading to many funds incorporating ESG into their investment process. Watch him explain this new approach to sustainable investing.

Investment expert Audrey Choi believes global capital markets – nearly $290 trillion of stocks and bonds in the world – could be the most powerful force for positive change at an individuals’ disposal. Watch her TED talk “ How to Make a Profit While Making a Difference ” to hear how she believes we can make a difference by investing in companies that champion social values and sustainability.