How Do I Take Charge?

The first step is to unpack your portfolio. Take a company-by-company approach to decide what impact you have.

Got some skin in the investing game? Maybe you have a 401K plan from your job or a portfolio managed by a financial advisor, but do you really know what’s in it? Our research shows a lot of people don’t. It’s also clear the public is becoming more informed, vocal, and motivated about making the world a better place. Whether you are investing a lot or a little, your money empowers the companies you invest in. If you want to change the structures of society, it’s time to get real about which ones you’re paying for.

Set Your Own Goals

We’re not suggesting you fire your financial advisor. Sustainable investing is not about getting rid of the traditional investment strategies that help you make money and save for your retirement. Rather it means adding a layer on top of those strategies, so you can be sure your investments align with your values and you’re prepared to navigate the changing world order.

But taking expert advice doesn’t mean you have to be passive. A financial advisor’s job is to help you reach your financial goals. Advisors are required to be up front about the potential risks and benefits inherent in playing the stock market. They are required to act in your best interest (it’s called fiduciary duty). And yet, it’s not up to your advisor to decide what you believe in. That has to come from you.  

Ask More Questions

Check out what’s in your portfolio. Ask your financial advisor to explain the choices that went into building it. Is one investment chosen to accelerate growth while another is chosen to stay stable during a dip in the markets? Most financial advisors will encourage diversification (i.e.,balance between safety and financial gain). This is why you have a portfolio rather than invest in a single company. It would be too risky to have all your eggs in one basket.

Every company in your portfolio is also an opportunity to balance your sustainability impact. Every company has an Environmental, Social, and Governance story to tell. Companies might be strong in one area, but weak in another. Understanding what companies you are investing in and why gives you the power to decide what your resources are supporting.

Understand the Tools

So you checked out your portfolio and some of the investments have a bunch of acronyms and something that seems like a whole industry, a theme, or a mission statement?  

This is probably an ETF or Exchange Traded Fund. An ETF is a collection of stocks that is curated by a fund manager based on a certain objective. You can invest in an ETF with a single purchase, and like a stock, an ETF fluctuates in price and can be traded throughout the day.  

When financial media refers to the record inflow into sustainable products, in large part they mean sustainability themed ETFs.  At UnifyImpact, we like sustainable ETFs. A lot of the research supporting the idea that investors are interested in sustainability and that sustainable investing can be profitable comes from studying ETFs. But while sustainability-themed ETFs are a step in the right direction, labels aren’t everything. By investing in a fund, you are depending on a fund manager to choose which companies live up to the mission.

Unpack the Labels

If you are interested in testing whether a sustainable fund really aligns with your goals, zoom in.  Take iShares MSCI Global Impact ETF as an example.  iShares is the brand name for ETFs created by BlackRock, an asset management firm.  MSCI is the data provider they like to use to measure sustainability performance. Global Impact is the name of this particular product, which includes “positive impact companies that derive a majority of their revenue from products and services that address at least one of the world’s major social and environmental challenges as identified by the United Nations Sustainable Development Goals.”

You can check out the complete list of companies included in the fund, its “holdings,” on iShares’ website. Like in your own portfolio, each of the companies in a sustainability fund has its own track record. This one includes 160 companies, each making up a percentage of its overall value. The companies are in different industries and spread around the world. They each do business relating to one of the UN SDGs, but on the iShares website, it’s hard to dig deeper.  

How does each company do on Climate Action? On Gender Equality? Does good environmental performance mean a company has decent Human Rights standards? Not necessarily. Furthermore, the holdings of an ETF are subject to change on a day-to-day basis. 

Want to take back control? Unpack your ETFs, check out each company on the UnifyImpact app, and finally see the whole picture.

Get Informed

If you want to take charge the first step is to understand what you’re investing in. It’s easy to be passive about your investments if you have a financial advisor, and it’s easy not to ask questions about an ETF if it has been making you money. But both portfolios and funds are just collections of companies. They’re companies that have bad labor standards, corrupt CEOs, and pollution management issues. They’re companies that take action to improve product safety, close the gender pay gap, and promise to reduce their carbon emissions to mitigate climate change. Take it down to the company level to harness your economic power and use investing to create pathways towards your vision for a sustainable future.

Do you want to claim power over the impact your money has on the world? Download our free app and join UnifyImpact today. Want to stay up-to-date on the latest in sustainable investing? Follow us on Twitter, LinkedIn, Facebook, and Instagram!

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