Week 12: Ethical and Socially Responsible Investing

Let’s talk about how your money can do more than just grow—it can also reflect what you stand for.

First off, what is ethical investing and socially responsible investing (SRI)?

Ethical investing and socially responsible investing (SRI) are ways to grow your wealth while staying true to your values. Instead of just looking at which companies make the most profit, you’re also asking:

“Is this company making the world better—or worse?”

Think of it like voting with your dollars. You’re choosing to support businesses that match your ethics and avoiding ones that don’t.

Ethical Investing: Investing with a conscience!

Ethical investing starts with your personal beliefs—whether that’s caring for the planet, human rights, animal welfare, or staying away from harmful industries.

There are two core approaches…

• Negative screening: This is the “I won’t support that” approach. You avoid industries like tobacco, fossil fuels, weapons, gambling, or anything else that doesn’t sit right with you.

• Positive screening: This is the “I’ll support that” side. You actively look for companies doing good—think clean energy, fair trade, cruelty-free products, or companies committed to diversity.

Example: If you care deeply about the environment, you might pass on a high-earning oil company and instead invest in a solar energy startup—even if it’s a bit riskier financially. Why? Because it feels right.

Taking it a step further…

Socially responsible investing (SRI) adds a structured lens to ethical investing using ESG criteria—that stands for Environmental, Social, and Governance.

Here’s what that means:

• Environmental: How is the company treating the planet? Are they cutting emissions, recycling, and using clean energy?

• Social: What’s their relationship like with employees and communities? Are they fair, inclusive, and respectful?

• Governance: Are they being run ethically? Are the leaders transparent and accountable?

Example: A company that treats its workers well, has a small carbon footprint, and promotes women to leadership? That might be a strong candidate for an SRI investor.

You might be wondering, how do you get started?

You don’t need to be an expert to align your portfolio with your values. Just follow these steps:

1. Identify what matters most to you

Ask yourself:

“What issues do I care about? What am I not willing to support with my money?”

You might care about:

• Climate change

• Gender or racial equity

• LGBTQ+ rights

• Animal welfare

• Fair labor practices

Decide which industries or behaviors you want to avoid (negative screening) and which causes you want to support (positive screening).

2. Find out what your options are

There are tons of ways to invest ethically:

• Mutual funds and ETFs focused on ESG criteria

• Individual stocks of companies that match your standards

Look for ESG scores and sustainability reports. Websites like Morningstar, MSCI, or Sustainalytics are great for this.

3. Choose the right platform

Some brokerages make ethical investing super easy by offering ESG filters or even entire portfolios focused on impact investing.

Make sure your platform supports:

• Clear ESG ratings

• Custom screening tools

• Education and resources

4. Diversify by staying ethical

Don’t put all your values (or money) in one basket. Build a portfolio that spreads across different sectors—just make sure they all meet your standards.

5. Stay up to date

Values aren’t static—and neither are companies. Maybe your favorite green energy stock gets caught up in a scandal. Maybe a tech company improves its diversity efforts.

Check in regularly to make sure your investments still reflect your principles.

I’m here to be real with you, so I’ll tell you there are ups and downs

Benefits:

• Feel good while growing your money: You’re not just chasing profit—you’re making an impact.

• Support long-term change: Your money can help companies doing good thrive.

• Lower risk in some cases: Companies that treat people and the planet well often manage risks better and avoid lawsuits or scandals.

Challenges:

• Your values may differ from others: What’s ethical to you might not be to someone else, so you’ll need to set your own standards.

• Limited options in some sectors: If you’re strict, you may have fewer companies to choose from.

• Performance worries: While ESG funds can perform very well, they might miss out on high-earning (but less ethical) sectors like oil or weapons.

• Data quality: Not all ESG info is transparent or easy to compare. Use multiple sources when evaluating.

Ethical investing and SRI are more than just buzzwords—they’re ways to grow your wealth while helping shape a better world. You don’t have to sacrifice returns for values. With the right tools and approach, you can have both.

So, whether you care about clean oceans, human rights, or transparent leadership, your investment choices can reflect who you are.

Because your money should work for your goals—and your values.