ESG Investing: How to Invest in Alignment with Your Values

A&I Financial Services > Blog > ESG Investing: How to Invest in Alignment with Your Values

“I want to do well and do good for the environment.”

Read this Periscope to learn how we invest using filters like environmental, social considerations and corporate governance (ESG investing).

Many investors want to “do well and do good” for the environment, for society, and invest in companies that share their beliefs.

Environmental, Social and Corporate Governance

One way to invest in alignment with your values is to prioritize what means the most to you. Many of the topics that are rising to the top today are the environment, social considerations and corporate governance. ESG is a global movement, promoted by the United Nations and small companies like us.

For us, ESG investing means doing well and doing good; we don’t believe we have to give up investment performance in order to invest in alignment with our values.

ESG Investments May be Helping the Environment

A recent research report shows that investors who make investment decisions in alignment with their values may be making an impact on the environment. Many companies want to achieve higher ESG scores, and are changing their environmental impact to attract more ESG investors.

To read more about this, click here. An important disclosure here is that correlation is not causation. In other words, just because these companies environmental scores are improving, does not necessarily mean that investors caused them to get better. Still, this is promising.

To read more about this, click here.

How We Invest in ESG

Using rigorous academic research, new and constantly-improving technology and our network of investment experts, our team makes ESG investment decisions that

  1. Meet our client’s real-life, long-term financial goals and
  2. Reflect their personal values.

We lean on our outside investment research experts at Litman Gregory to provide us timely and important information on the impact of our investments. The research includes a variety of measurements of an investment’s impact, including:

  1. Sustainability rating
  2. ESG % Rank in Global Category
  3. And a rank for each of the 3 categories: environmental, social considerations and corporate governance

Carbon Intensity

One of the “hot button” issues, pun intended, is the impact on carbon creation. The researchers measure all of the investments in ways that are important for the environment. These include:

  • Low carbon designation
  • Carbon intensity vs. benchmark

Type of Business

Another measurement used by the research team is to measure how much of the portfolio is in any of the following business lines.

  • Thermal coal
  • Thermal coal extraction
  • Oil sands extraction
  • Arctic oil and gas exploration
  • Oil and gas production
  • Oil and gas products and services
  • Oil and gas generation

Our ESG portfolios have zero exposure or, lower than the benchmark exposure, to these business lines. For the latest details, ask your financial advisor!

Type of Product

Our ESG research team also measures what type of products are created by the investments. The issues they are looking for include:

  • Adult entertainment
  • Alcohol
  • Animal testing
  • Abortive/Contraceptives/Stem Cell
  • Controversial Weapons
  • Fur and Specialty Leather
About the author

Karl Frank, Certified Financial Planner ®, MSF, MBA, MA, is the President of A&I Financial Services LLC, a local business that specializes in wealth management, insurance planning, and retirement planning. Karl cares for business owners and the businesses that care for them. Learn More about Karl.