Ethical Investing

Put Your Money Where Your Values Are

I’ve learned a lot over the years about the benefits of living according to my values: The sense of freedom and ease that comes from not doing or saying things that harm myself or others. The peace of mind I experience when I end the day without a nagging sense of regret or shame. The decrease in stress from not needing to manage a cascade of missteps. In short, the bliss of blamelessness that naturally expands one's capacity for love, joy and creativity. Sounds pretty great, right? It is, and it’s well-worth the investment of personal reflection, change and growth that brings you into closer alignment with your values.

Where I’m a little late to the party is in the realm of aligning my values with my investment portfolio, specifically my retirement savings. I’ve tended to accept the advice (from parents, peers and mainstream media among others) that by consistently putting a portion of my earnings into long-term retirement vehicles, I’ll be able to meet my goal of financial self-sufficiency once I stop working full-time. By doing so, I’m honoring my values of self-discipline, security, and freedom. If I elect an automatic contribution from my paycheck and let the magic of the market and compound interest do the rest, I’m on a good path, right? Well, yes….sort of. It turns out that entrusting your savings to the folks who run large financial services organizations with minimal scrutiny may not be the finest expression of your values. Most generic target funds designed to “simplify investing” are a basket of stocks in lots of individual companies that get rebalanced as you get closer to retirement. Some of these investments are fossil fuel companies that are exacerbating the climate crisis. Others invest in private prisons, weapons (both manufacturing and sales), raw minerals extraction, and the dumping of toxic chemicals into the water.

So if you’re really trying to save for retirement without harming people, animals, or the planet, you need to take responsibility for what your money is supporting. Ethical investing, also called socially responsible investing (SRI), impact investing, values-based investing, or sustainable investing doesn’t have to mean compromising financial returns for the sake of a less harmful portfolio! In fact, many socially responsible funds have matched the performance of traditional funds.

If this is something you’re inclined to explore further, here are some suggestions and resources.

1. What matters most to you? Reflect on your core values. Need some clues? Check out this list developed by Brené Brown.

2. Which industries or practices do you want to avoid and which ones do you want to support? Examples might include fossil fuels, weapons manufacturing, gambling, tobacco or companies with poor labor practices vs. renewable energy, fair trade practices, or companies with strong DEI initiatives.

3. Review your current investments. Know what you own! This takes some patience, but have a look at the various funds your 401k or other retirement vehicle is invested in, and see if there are socially responsible alternatives available (and then check their ratings). You could use a robo advisor to do this (easier), or you could do it yourself (cheaper). This short video explains the difference. Move your money into more ethical funds as needed (with the understanding that it’s difficult to achieve a 100% harm-free portfolio).

4. Advocate for better options. Most employer-sponsored retirement funds don’t have good socially responsible options, or allow you to move your investments to a different financial services company that does. In this case, talk to your company’s plan administrator and your colleagues and advocate for change!

5. Keep educating yourself. Subscribe to newsletters and podcasts that support ethical investing, including As You Sow, the podcast Reimagine Wealth , and Jeff Siegel’s Conscious Capital Report.

Attending to the connection between your retirement savings and your values can help you create a more purposeful financial life. It can also have a real impact in the world at a time when regressive policies are being enacted that do serious harm in the world. Be patient and kind to yourself, and seek advice and support along the way. Gratitude to VKW for patiently coaching me along this path!