I’ve only been investing for a few years so this is an area where I still have a lot to learn. As I become more focussed on trying to reduce my negative impact on the environment I’m also trying to make sure this is reflected in how I invest my money.
Here are the five ways in which I am trying to invest more sustainably:
- Switching my default workplace pension – This is a work in progress as I only recently found out more about the default fund that my money has been going into. The top ten companies include a fossil fuel company and a tobacco company so I am going to find out about transferring to an alternative fund.
- I’m starting to invest in an ESG (Environmental Social Governance) ETF as part of my Stocks and Shares ISA. These funds avoid companies that operate in certain areas, such as fossil fuels and tobacco. The website I like to use to find ETFs that meet the criteria I am looking for is Just ETF (www.justetf.com) which you can sign up to for free. For example, I always go for funds where any profits are reinvested into the fund (accumulative – or “Acc” on the listing) rather than ones that pay dividends (“Div”) so you can filter for those types.
- I also invest into a clean energy ETF fund as part of my Stocks and Shares ISA. This is a higher risk investment and performed badly the first year but has done well recently.
- I don’t invest into individual company stocks, but if I did I would check out their annual report to for their reporting on environmental matters. In the UK if a company is quoted on the stock exchange it needs to report on greenhouse gas emissions and other environmental matters. There are also websites such as https://www.csrhub.com/ which provide comparative ESG ratings for different companies by industry etc.
- Holding asset managers to account. This fantastic blog by Mindy from Bangkok to Blighty opened my eyes about the role funds like Vanguard can play to use their influence to obstruct climate-related motions at fossil fuel companies. If this bothers you (and I’m guessing if you are reading this it does) then you can either divest or use your voice to ask for more ESG funds and hold them to account for their voting record.
How do you “put your money where your mouth is”? What other investment approaches could I think about? I’m quite new to this, so all input gratefully received!
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