What is Values-Aligned Investing?
Bringing your money and principles together
For profit and purpose.
Broadly speaking, values-aligned investing means investing in companies, funds, or projects that share similar values as you, or that have a mission, commitment, or business model that’s in alignment with your ethics and principles.
Let’s start with a little history. The pioneers in responsible investing in the West were religious groups. Both the Methodists and Quakers avoided investments in alcohol, tobacco, and the slave trade in the 18th and 19th Centuries. Then, a revival took place during 1970s as a reaction to the the Vietnam War, when students pushed University endowments to divest from chemical weapons companies. It was also during this time period that the first mutual fund that intentionally avoided alcohol, tobacco, gambling, and weapons was created.
In the 1980’s, religious groups were leading the responsible investment movement again. One story I heard was about a convent who wanted to grow and protect their assets to be able to sustain the convent for generations, and needed investment options that fit their ethics. For example, they were strongly against investing in South Africa because of the human rights violations of the apartheid system. Because sentiment around this and other issues was growing, the responsible investing movement began picking up momentum in the late-80s and early-90s. Since then, the movement has expanded to include ESG considerations, values-aligned investing, sustainable investing, and impact investing.
These days, most approaches to values-aligned investing use the United Nations Sustainable Development Goals (SDGs) as a benchmark. The United Nations SDGs are a “shared blueprint for peace and prosperity for people and the planet, now and into the future” and were adopted by UN Member States in 2015. There are 17 goals intended to be achieved by 2030 that encompass such themes as ending poverty, improving health and education, reducing inequality, spurring economic growth, tackling climate change, and preserving our oceans and forests.
For you, as an investor, you might look for companies that are highly regarded for treating employees well (Goal 8), paying womxn and people of color equally (Goals 5 & 10), fighting climate change (Goal 13), etc. There are also exchange traded funds (ETFs) that evaluate and invest in companies based on whether they’re intentionally working toward the UN SDGs. If you want to research companies or funds you’re thinking of buying or already own, you have a few options:
For Stocks: Sustainalytics by Morningstar; or MSCI ESG ratings. If you have a Fidelity account, when you look at a company’s info and performance page, you can scroll down nearly to the bottom and you’ll find it’s ESG ratings.
For ETFs and Mutual Funds: As You Sow.
Ultimately, investing according to your values starts with you — what are your values? What causes do you care about? How do you prioritize or rank those amongst each other? Once you have an idea of your values and an account setup with Fidelity, Vanguard, Wealthfront, or any brokerage, then you’re ready to start researching and investing according to your values.
