A Morningstar study concluded that 72% of the US population is interested in sustainable investing, yet many investors still find the space confusing. Here are four ways to access sustainable investing for your portfolio.
- ESG Investing. This is a way to evaluate companies based on their environmental, social and governance business practices to identify risks and opportunities. An example would be selecting companies with a high ESG performance across broad market exposures like US equities.
- Thematic Investing. This focuses on a particular environmental, social or governance issue. An example of this would be targeting clean energy companies, or companies promoting gender equality.
- Screened Investing. With this, we try and seek to eliminate exposures to companies or sectors that pose certain risks or violate an investor’s values. An example of this would be screening out companies involved in fossil fuels, firearms or tobacco from your portfolio.
- Impact Investing. The goal with this strategy is to seek to achieve a measurable, sustainable outcome alongside a financial return. An example of this would be to invest in green bonds, that finance environmental projects like new solar panels.
If you’re looking for additional information on sustainable investing, Marc Bautis recently recorded an Agent of Wealth Podcast episode on the topic, which you can listen to below.
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