Sustainable Investing for Earth Day

On April 22, millions of people around the world will participate in Earth Day-related activities. Some people will march to raise awareness, some will plant trees, and some will take the time to clean up plastic and trash that has been carelessly discarded.

What Is Earth Day? A Brief History

Before Earth Day was a nationally recognized event, before the Environmental Protection Agency , and the Clean Water Act , much of America was not particularly focused on environmental protection or regulation. For years, factories had pumped pollutants into the air and water supply.

But awareness about the impacts of environmental pollution began to grow in the 1960s, thanks in part to books like Silent Spring by Rachel Carson, which detailed the dangerous effects of pesticides like DDT.

Senator Gaylord Nelson was elected in 1962 and by 1969 he was considered one of the leaders of the modern environmental movement . He developed the idea for Earth Day based on inspiration he took from the anti-war “teach-ins” that were taking place on college campuses around the nation in protest of the Vietnam War.

Nelson announced the concept for Earth Day in the fall of 1969, encouraging the entire nation to get involved in a large-scale environmental demonstration.

The following spring, on April 22, multitudes of people participated in rallies and events across the country at schools, colleges, and community centers. In July 1970, the EPA was established as part of the response to the public’s increasing demand for clean water, air, and land.

Since its inception in 1970, Earth Day has grown into a global, annual event. By its 20th Anniversary, more than 200 million people in 141 countries participated in Earth Day activities. According to Earth Day Network, a nonprofit that coordinates Earth Day Activities, there are now more than 1 billion people in 192 countries that participate in Earth Day. In the past, Earth Day Network has coordinated targeted campaigns for Earth Day—in 2018 the focus was on ending plastic pollution . This year, the focus is on protecting endangered species .

What Is Sustainable Investing?

With such a large following, it’s clear that Earth Day has grown into an impactful day of civic engagement. But, if you’re passionate about environmental preservation, you may be interested in expanding your activism beyond April 22.

Maybe you’re considering making your home more eco-friendly by installing some solar panels. Or perhaps you plan to do a bit of gardening and composting to cut down on the amount of trash you and your family produce.

Another option that could allow you to promote a more sustainable future is sustainable investing. Traditionally, investors evaluated the performance of their investments based solely on financial measures. But in the past decade, investing with a focus toward environmental and social issues (in addition to financial returns) has become mainstream.

Sustainable investing takes its roots from socially responsible investing. In its earliest days, socially responsible investing was based on avoiding “sin” stocks, like tobacco or alcohol due to moral and ethical principles.

Today’s sustainable investing takes it a step further. In addition to “negative screening ”—avoiding investments with a company you disagree with on an ethical basis, you can invest in a company or fund that is ethically in line with your goals.

Sustainable investing is an umbrella term for a variety of investing styles that screen securities based on environmental, social, and governance issues, also known as ESG .

Typically, investors focus on seven areas when evaluating socially responsible or sustainable funds. These include :

•  Corporate Governance and Ethics

•  Workplace Practices

•  Environmental Concerns

•  Product Safety and Impact

•  Human Rights

•  Community Relations

•  Indigenous Peoples’ Rights

Starting Out with Sustainable Investing

Investing can be confusing and the world of sustainable investing is no different. But with some careful research you can find the funds or securities that work for you.

When it comes to investing, it never hurts to ask for help. If you’re not sure where to start when it comes to sustainable investing, consider speaking with a financial professional for some guidance.

Finding Some Sustainable Funds

As you begin your journey in sustainable investments, it may be worth starting with a mutual fund or similar investment. You could benefit from diversification while still being able to invest in something that is socially or environmentally impactful.

The Forum for Sustainable and Responsible Investment has a database of sustainable funds that could be a good starting point as you begin your research.

Diversifying Your Investments

Investing comes with inherent risks, so it stands to reason that even when you are investing in sustainable funds, you’ll want to diversify your portfolio.

A common mistake when it comes to sustainable investing is buying funds that are concentrated in a specific industry. Diversification may help limit your risk of putting all your eggs in one basket—to borrow a phrase.

Considering the Fund’s Performance

You’re likely getting into sustainable investing in an effort to promote causes that are important to you. Take the time to review the fund’s or stock’s performance in addition to its social or environmental value. The goal is to make financial returns while also investing sustainably, so be sure to review all the details before you buy.

Let SoFi Invest Guide You Toward Sustainable Investing

If you are interested in prioritizing sustainable investing, consider SoFi Invest. When you open an investment account you’ll have access to a team of financial professionals who can help you determine your financial goals and risk tolerance, and help you build a diversified portfolio.

With SoFi Invest, you can begin investing with as little as $1.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory services offered through `SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA /SIPC .
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