Socially Conscious Investing and the Women in the Movement
“Right now, your prosperity is provided by a plentiful supply of clean air, water, food, and energy. Although some of you like to take all the credit for this, it’s really my ecosystem that does all the hard work: the plants, animals, oceans, air currents, and especially the atmosphere. Without these services, you would lose your ability to create the food and products that form your current prosperity.” - Earth, Mr. Money Mustache
Parts of this post originally appeared on The Do Something Project (my other site which is dedicated to sustainable living), but it looks like sustainable living and sustainable investing are merging as I dive deeper into making my money work for me in a way that aligns with my personal values.
The full post is available here.
Investing is Not Limited to Stocks
In the FIRE community, the first pillar of living a financially independent life is investing in a low-cost index fund that covers the Total Stock Market. This makes sense for a host of many reason (low fees, historically positive returns), but if we want to invest in a way that also takes into account the future of our planet, then we need to assess our investments differently.
Investing in the Total Stock Market means investing in the entire economy which is well and good, but the total stock market skews towards large companies that are over profiting from consumption. If we analyze what the total stock market is comprised of, we may see companies that are not in line with our values. For example, if we take a look at the S&P 500 list of companies, we will see companies like Altria Group (formerly Philip Morris), makers of tobacco related products or Exxon, one of the largest oil companies, or Apple, makers of technical products that extract precious metals from the Earth (full disclosure I still own Apple stock). These companies have consistently generated high returns over many years, but are not technically the best companies with one promoting a product that has been scientifically proven to cause cancer and another company that continues to profit off of fossil fuels and another that has been cited for workplace manufacturing violations. Are these companies inline with our values? Are we comfortable reaping the rewards of these companies to fund our future?
The thing we have to understand is that the economy is big. There are plenty of things that we can support and invest in that are not distasteful to our values. The economy doesn’t also have to be the grand economy that appears on the 24/7 new channels, but the local economy where we carry our day-to-day activities. The small businesses where we live, the mom and pop stores down the street, they matter too and they need our investment and our support.
Investing in Good
Investing, the word itself is loaded with so much, but basically it is the idea that we can use money, time and talent in order to achieve a desired outcome. We can invest in ourselves via continuing education so that we can gain the skills necessary to succeed and help others. We can invest in other people and businesses so that they too can thrive and grow on their own. Investing is good unless it is used to exploit people and natural resources all of the sake of higher returns and a larger profit.
I have to be up front here that I never really thought about the impact of my investments until I delved into the world of sustainability. I loved seeing the high returns in my portfolio, but the past few years I’ve questioned the impact of these high returns. I’m still invested in the Total Stock Market Funds (which from the example above is not the best place in terms of social/environmental investments), but I’m learning and slowly taking action.
The book Your Money or Your Life put in a lot of perspective for me and I am glad to have read it on it’s re-release. I even got a chance to hear Vicki Robin speak at a panel. She seeded in my the idea that financial independence is possible in a way that doesn’t hurt the environment.
My Investing Status
I’m making strides to transition my investment into more sustainable alternatives, but I have only just started the work to see what the options are. I think people automatically assume that investing with environment and social impact in mind doesn’t net the same return as other investments, but no investment will always net high return, sometimes it just depends on the year and the market. I’ve learned so much already and I continue to learn what the other options are. I personally want financial security for my future family, but I also don’t want that to be at a cost to the Earth.
Socially Conscious Women on FIRE
As one of the primary editors on the site, I’m happy to promote and encourage investing that aligns with our lives. Personal finance is personal so if this is not your thing, it’s OK. With that, we will be featuring a few voices from women in the Financial Independence Retire Early community. They will provide their perspective on how they are gaining financial independence with people, planet and profit in mind. It has been insightful to read their posts and learn so many other options to traditional stock market investing. I hope you’ll follow along and get to know how to help your local community and city thrive better.