Sept. 13, 2021

6. Picking a focus for my investments


Today's letter is about picking a focus for socially responsible investments. Here's the letter:

How should I pick the focus of my socially responsible investments?

If you tend to pick from the 401k options at your job, I will be very impressed if your employer is already offering ESG funds as part of the 401k options. I do think that some companies, especially those that want the branding and to appeal to millennial employees are going to start offering more of these options in the future, but I don’t know how many are already doing that now.

However you’re investing on your own, I think the first thing is to set expectations. It is difficult to find publicly traded companies that are not harming our society. You might be thinking of companies like Ben & Jerry’s, but that is a subsidiary of Unilever. Or maybe you’re thinking of Patagonia, the clothing company, but they are not publicly traded.

So, what we’re left with are the publicly traded companies. You can rely on ESG ratings to select your stocks. ESG ratings are not morality ratings. I want to be crystal clear about that. It is more about the risks a company is taking in the way they operate within the categories of Environmental, Social, and Governance practices. And in fact, if you were to choose an ESG fund that some mutual fund has put together, you’ll probably find Amazon, and Tesla even though their scores aren’t sparkling. And yes, the fees are higher for ESG funds.

But I think your question gets at the higher level question a lot of us are wondering which is, with the impact that I can make, what are my priorities? Our priorities as individuals will be as varied as our life experiences and our exposure to the injustices that are taking place all around us.

So, I’ll share some categories that investors often list as their priorities when they link up with these socially responsible minded financial investors. Maybe some will resonate with you. And if you have a moment, you can email the show at spenddonateinvest@gmail.com for a worksheet you can go through to sort out your priorities.

  • Environment
  • Weapons
  • Tobacco
  • Equity and Inclusion
  • Labor Practices
  • Anti-monopoly

These are the most common categories you'll hear socially responsible investors discussing, and again, as discussed before, more often than not, investors are screening companies out if they are egregiously failing on one of these values. 

Don’t let perfect be the enemy of the good, while you look for companies that align more fully with your values, and while investment professionals come up with better tools to rate companies, get started with one step. That might be scanning your portfolio to make sure fossil fuel companies aren’t in your portfolio, or companies with known, glaring, labor safety violations are out.

On this podcast we talk about doing good with our money in a holistic way, across how we spend, donate, and invest, so we’ve got lots of chances to make small changes to add to something greater.

To submit your letter to the show, email spenddonateinvest@gmail.com

To support the show visit buymeacoffee.com/spenddonate

Support the show (https://www.buymeacoffee.com/spenddonate)
Transcript

Today's letter is about picking a focus for socially responsible investments. Here's the letter:

How should I pick the focus of my socially responsible investments?

If you tend to pick from the 401k options at your job, I will be very impressed if your employer is already offering ESG funds as part of the 401k options. I do think that some companies, especially those that want the branding and to appeal to millennial employees are going to start offering more of these options in the future, but I don’t know how many are already doing that now.

However you’re investing on your own, I think the first thing is to set expectations. It is difficult to find publicly traded companies that are not harming our society. You might be thinking of companies like Ben & Jerry’s, but that is a subsidiary of Unilever. Or maybe you’re thinking of Patagonia, the clothing company, but they are not publicly traded.

So, what we’re left with are the publicly traded companies. You can rely on ESG ratings to select your stocks. ESG ratings are not morality ratings. I want to be crystal clear about that. It is more about the risks a company is taking in the way they operate within the categories of Environmental, Social, and Governance practices. And in fact, if you were to choose an ESG fund that some mutual fund has put together, you’ll probably find Amazon, and Tesla even though their scores aren’t sparkling. And yes, the fees are higher for ESG funds.

But I think your question gets at the higher level question a lot of us are wondering which is, with the impact that I can make, what are my priorities? Our priorities as individuals will be as varied as our life experiences and our exposure to the injustices that are taking place all around us.

So, I’ll share some categories that investors often list as their priorities when they link up with these socially responsible minded financial investors. Maybe some will resonate with you. And if you have a moment, you can email the show at spenddonateinvest@gmail.com for a worksheet you can go through to sort out your priorities.

  • Environment
  • Weapons
  • Tobacco
  • Equity and Inclusion
  • Labor Practices
  • Anti-monopoly

These are the most common categories you'll hear socially responsible investors discussing, and again, as discussed before, more often than not, investors are screening companies out if they are egregiously failing on one of these values.

Don’t let perfect be the enemy of the good, while you look for companies that align more fully with your values, and while investment professionals come up with better tools to rate companies, get started with one step. That might be scanning your portfolio to make sure fossil fuel companies aren’t in your portfolio, or companies with known, glaring, labor safety violations are out.

On this podcast we talk about doing good with our money in a holistic way, across how we spend, donate, and invest, so we’ve got lots of chances to make small changes to add to something greater.

To submit your letter to the show, email spenddonateinvest@gmail.com

To support the show visit buymeacoffee.com/spenddonate