Do you know what your money is doing in the world? Many of us have no clue — and the sad truth is that your investments could be in direct conflict with your values.
At a recent conference, I heard a story about a woman who spent most of her time directly fighting Walmart on labor practices. She was dedicated to the cause and passionate about challenging the retailer’s practices. During a financial review, she discovered that the company was, not surprisingly, part of her portfolio. She was investing money in — or voting for — the very company she was fighting against. The point of this example isn’t to take a knock at Walmart; it’s that the storyteller’s investments and personal values were out of sync.
Enter impact investing. The trend aligns your investments with your values to earn both positive financial and social or environmental returns. It’s easy to think that this more holistic investment style is only for the rich and famous — folks who have enough money to worry about more than the bottom line — but that’s not true.
Impact investing is estimated to be a $35 billion to $100 billion industry, with projections to grow to $1 trillion in the next decade — not exactly a flash in the pan. And organizations like Impact Assets, a 501(c)(3) nonprofit with a commitment to expanding impact investing, make it easy to participate yourself.
So, how can you better align your money and values? Start with these three steps:
1. Understand where your money is: Think about the bank you use. Do you agree with their business practices? If not, find another or select a community bank or credit union. Look at the investments you hold — really look under the hood. Do you have investments that “do harm” in your view? Some common themes that people screen out are tobacco companies or companies with poor labor or environmental practices.
2. Look for alternatives: Find new options that fit with your overall asset allocation plan. You might want to select mutual funds from companies such as Calvert, PAX, or Domini. They offer broad social screens and more specialized themes, including global clean water, green bonds, and even a fund focused on women in leadership.
3. Consider private investments: An increasing number of private investments are even more specialized, such as community investment notes, which let you invest in your own backyard.
The takeaway? Your money can work for your values in the world and your bottom line — if you let it.
Beth Stelluto is a member of the DailyWorth Connect program. Read more about the program here.