hand holding globe

Voting with your dollar: How ESG investing can fit into your portfolio

We live in a world where aligning our values and beliefs with nearly everything we want and do is easier than ever. For example, if I valued the autonomy to travel the country during the year and maintain the same job while doing it, I could find said job due to the vast expansion of the virtual workplace to support that value. Or, if I believed installing Solar panels on my roof would save me money and make a difference at the same time, there are a plethora of companies eager to earn my business. Examples abound of this idea.

When it comes to making a difference in the world, the average investor wouldn’t think this to be possible through the selection of their investments. We invest our money in people/companies with the ideal of making more money, right? We aren’t necessarily concerned with what’s going on behind the scenes and maybe it’s because we didn’t know we were allowed to look beyond the curtain. Well, if we can align our values and beliefs with everything else we do, why not have the same liberties when it comes to how and where we are investing our money? In the same way you can vote with your dollar in what you wear, eat, or support, you can also do so in the stock market.

Environmental, Social and Corporate Governance (ESG) investments are how investors can directly reflect their values and beliefs inside their investment portfolio. The impacts of ESG investing run deeper than carpooling to work once or twice a month; they seek to reduce greenhouse gas emissions, potential emissions from reserves, coal usage, and manage operational waste and toxic spills. They can also focus on things like fair labor laws, gender equity, and many more ideologies across the spectrum.

At Inspired Financial, we have begun incorporating ESG investments into our clients’ portfolios, where appropriate, using a suite of sustainable funds through Dimensional Fund Advisors (DFA). We have used Dimensional investment funds for years and continue to do so with ESG funds due to their emphasis on sustainability, broad diversification, and low cost. A $1 million investment in the US Sustainability Core 1 Portfolio (DFSIX) is exposed to 45.9 fewer tons of CO2e emissions per year than the same investment in the Russell 3000.

On average, Dimensional’s five ESG funds – containing this sustainability tilt – reduce the exposure to greenhouse gas emissions intensity by 75% and boast a 100% reduction of exposure to potential emissions from reserves when compared to their respective benchmark indices.

And this is just the tip of the iceberg. Inspired Financial conducted a webinar with DFA Investment Strategist, Isabelle Williams, to gain more insights on ESG investments and the opportunities they offer. You can CLICK HERE to view a recording of the conversation.

Interested in learning more about how sustainable funds can be incorporated into your portfolio? Give us a call to see how you can better align your values and beliefs with your investments!

Leave A Comment