Do your financial investments align with your values?

Are your investments or other financial actions supporting activities that contribute to the climate emergency (such as extractive activity of fossil fuel companies), or are your investments supporting the clean energy transition?  There now are several different financial instruments and strategies of investing that can help combat climate change. These include the following.

• Environmental, Social, and Governance (ESG) investing is where non-financial factors such as how a company impacts the environment (E), treats people (S), and governs itself (G) is included in investment decisions. ESG investing is done with the aim of obtaining both financial returns and positive societal/environmental impact and is also often referred to as  sustainable or socially responsible (SR) investing. Companies are evaluated based on their corporate policies and that criteria encourages companies to act responsibly
• Thematic Exchange Traded Funds (ETFs) and Mutual Funds. These funds invest in companies focusing on clean energy, water infrastructure, electric vehicles, and sustainable agriculture.
• Green Bonds and Climate Bonds.  A type of sustainable fixed income investment that provides funds for climate and environmental projects undertaken by governments, utilities, or others (i.e., not for company equity purposes). Green bonds can have similar credit ratings to other bond issues.
• Impact Investing (Outcome-Driven) which goes beyond “doing no harm” (ESG) to more actively “doing good.” This involves investing in companies whose primary mission is to solve climate problems, often resulting in measurable metrics like “tons of carbon avoided”. A large and growing number of mutual funds and ETFs with environmentally and/or socially responsible investing mandates are now available, in addition to individual stocks and bonds that may qualify as ESG investing vehicles.

Like all financial investments, sustainable investments come with risks of loss and are not guaranteed  unlike bank accounts which are insured (up to the limits of FDIC provisions). It is important to research climate-friendly investing options (read each prospectus, weigh the risks, evaluate fees) before investing.

Disclaimer: Energize Acton and MassEnergize are not investment advisers, nor do we provide financial planning, legal, or tax advice. Nothing in our communications or materials shall constitute or be construed as investment advice or investment recommendations.