Alignment of Investments to Values

Alignment of Investments to Values

One barely has to skim news headlines to be aware that many of the greatest challenges of our time involve social and environmental issues. From workers’ rights to climate change, our responsibility to be aware of how our decisions affect populations and environments has never been greater. One area where I have the opportunity to voice my values is through my investments.

The concept of aligning investments with values is not a new one, as communities have invested in accordance with local customs or traditions for hundreds of years. However, the concept has experienced a recent reemergence in the form of “impact investment”: the practice of investing for financial returns as well as some kind of positive social and/or environmental impact. 

There are an increasing number of opportunities to maximize financial returns as well as sustainability and impact: everything from negative screening of objectionable sectors used by socially responsible funds, to proactive investment in businesses leading in environmental, social and governance standards, to thematic investments in things like community development, education, healthcare, resource scarcity, climate change mitigation, and renewable energy. I realized that my traditional investment managers had a single focus on financial returns, analyzing performance without any integration of environmental or social returns and risks. 

After thorough research and conversations with impact investors and impact advisors, I have recently started moving my portfolio in this direction. Now my fixed income investments include climate change solutions in the form of “green bonds”, which are high-quality bonds invested around the world in high-efficiency water irrigation projects, low carbon waste management projects, solar retrofit solutions, and other climate change mitigation solutions.  I also have investments in stock and fixed income portfolios that do considerably better than their traditional benchmarks in measurable areas like toxic emissions, water use, health and safety standards, diversity on corporate boards, and business ethics.   

This concept of investing in alignment with my values appeals to me on several levels – both practical and personal. From a practical standpoint, it seems logical that those companies who are vigilant about their use of resources and investing in cleaner, more efficient technologies as well as safe, transparent supply chains are those that will be positioned to succeed in the future as well as withstand an increasingly resource-scarce world. From a personal standpoint, I remain intrigued by the idea that in addition to my charitable giving, I can use my investment portfolio to invest in ideas, businesses, places and communities that I care about. I continue to explore impact investing as the field evolves, and hope to be able to expand my work while providing leadership to others.   

Resources: Here are a few educational resources for those interested in learning more about impact investing:

ImpactAssets Issue Briefs : ImpactAssets Issue Briefs are offered as concise articles exploring topics of interest and relevance to impact investors or those interested in learning more about impact investing. 

The Case Foundation: A Short Guide to Impact Investing 

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