Socially Conscious Investing

How To Choose Sustainable Stocks And Mutual Funds

by Sheila Julson

“Vote with your pocketbook,” the saying goes, prompting consumers to buy parkas from planetfriendly Patagonia or socks by Bombas, which donates a pair to homeless shelters for every pair purchased. When choosing stocks and mutual funds, a growing number of investors don’t just want to get a good return on their investment, they also seek to support corporations that spread kindness, protect (or do not pollute) the environment and support women, minorities and LGBTQ+ people.

This year, the National Association of Securities Dealers Automated Quotations (NASDAQ) reported that environmental, social and corporate governance investing “represents more than $8 trillion in assets under management in the U.S. alone, and people expect the worldwide number to surpass $50 trillion by the end of 2025.”

These types of mutual funds can yield returns akin to conventional funds, says Michael Young, director of education and outreach for the U.S. Forum for Sustainable and Responsible Investment (US SIF), a Washington, D.C.-based nonprofit. Some industries, such as oil and gas, may be more eco-challenged than others, but companies can and should make best efforts relevant to their industries, he says, suggesting that investors review a company’s corporate social responsibility report, which provides insight into their environmental and social practices.

Young recommends that new investors start by determining which social and environmental issues matter most to them. From there, tools such as the free US SIF sustainable investing course (ussif. org/courses_individualinvestors overview of sustainable investing, as well as investment options and strategies. He also encourages a visit to As You Sow (AsYouSow.org/invest-your-values investors find the companies and mutual funds that align with their social and envi ronmental principles, and to steer clear of those that don’t.

“Most people invest in companies through fund structures via retirement plans or online brokerages,” Young ex plains. “Through As You Sow, they have search tools that help interested investors determine if they own funds that include companies in fossil fuels, weapons manu facturing or other industries one might not want to invest in.”

Robin Diedrich, the director of sustain able investing for Edward Jones, asserts that their division arose over the past few years as a result of client demand. The analysts in her division evaluate wheth er the stated sustainability and financial objectives of a fund are actually being met, using vetting tools like Morningstar (Morningstar.com/topics/sustainable-invest