ESG Investing 101: Aligning Your Values with Your Portfolio

Jackie Thibeault, Associate Wealth Advisor, has published a new article on LinkedIn breaking down the basics of ESG Investing: ESG Investing 101: Aligning Your Values with Your Portfolio.

Sustainability and ethical considerations matter to investors. There is a growing desire for investors to consider not only financial returns, but also the impact on the planet, people, and internal governance practice. Environmental, social and governance (ESG) investing has increasingly grown in popularity as a way for investors to evaluate these impacts.

What is ESG Investing?

Environmental Factors. Environmental factors assess a company’s impact on the natural world. This includes:

  • Waste and Pollution: How does the company manage waste and minimize pollution?
  • Climate Change: How does the company limit carbon footprint and greenhouse gas emissions? Are they working towards reducing future emissions?
  • Resource Management: Is the company using renewable resources and practicing sustainable sourcing?

Social factors. Social factors focus on the company’s relationships with its employees, customers, and the communities where it operates:

  • Labor Practices: Are the working conditions fair and safe for employees?
  • Diversity and Inclusion: Does the company promote equality and diversity within its workforce?
  • Community Engagement: How does the company contribute to the well-being of the communities it serves?

Governance Factors. Governance factors examine a company’s internal processes and policies:

  • Transparency: Does the company provide clear and accurate information about its operations and financial performance?
  • Board Composition: Is there diversity and independence on the company’s board?
  • Ethical Practices: Does the company follow ethical business practices and comply with regulations?

What determines whether a fund is ESG?

Many funds use third-party ESG ratings and scores from organizations like MSCI, S&P, or Morningstar to evaluate companies. These ratings help determine if a company meets ESG standards.

Some funds, like those rated by Morningstar, have an ESG Commitment Level that indicates how deeply ESG factors are integrated into their investment process. Levels range from “Leader” to “Low,” with “Leader” funds fully integrating ESG into their security analysis and portfolio construction.

Why ESG Investing Matters

ESG investing helps investors make informed decisions by considering factors that traditional financial analysis might overlook. Companies that prioritize ESG factors may be better equipped to manage risks, adapt to changing market conditions, and achieve long-term success. Investors who incorporate ESG criteria into their strategies can align their investments with their values and contribute to positive social and environmental outcomes.

We appreciate that many of our clients at Copper Leaf Financial care deeply about integrating ESG strategies within their portfolios. As such, we offer sustainability portfolios that have been rigorously screened by our investment managers to ensure that clients are investing in a broad array of U.S. and international, publicly-traded corporations – corporations that are committed to an environmentally sustainable future. Click here to learn more about Copper Leaf’s sustainable planning and investment services or contact us today to schedule a complimentary introduction meeting.

Recipients should not act on the information presented without seeking prior professional advice. Check with your advisor about your specific situation or contact Copper Leaf Financial at 802.878.2731.

Click here to read the article published on LinkedIn.

By Jackie Thibeault, Associate Wealth Advisor, Copper Leaf Financial

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