Socially Responsible Investments: How Smart Investors Quantify Sustainability


When considering any investment, it’s important to think about how the investment might affect you and your portfolio over time. Sustainability is becoming a bigger and bigger part of many investors’ decision-making processes, whether they’re buying stocks, bonds or other assets. Even if you don’t have a lot of money to invest right now, you can still take steps to be more aware of where your money goes and how it can impact your future. 

There are many ways to do this—investing in sustainable stocks or funds is just one of them. Making sure your investments align with your values will help ensure that you not only have a positive impact on the world but also that you get something out of the deal. 

Here are some criteria for assessing sustainability in your socially responsible investment.

Positive Impact On People

Investors often forget to consider the people affected by their money. Make sure you know how your money is being used, who is being affected, and whether that’s valuable. Of course, when you buy stocks, you’re not buying any specific product or service—you’re buying a small stake in the company itself. But that’s not to say that the company’s work can’t have an impact on people. 

For example, investing in a pharmaceutical company that doesn’t have an impact on the public is likely not the best idea. Instead, it’s important to look at companies that positively impact people’s lives.  

The Green Rating

Green investing has been popular for years, but many people don’t know if the investments they’ve chosen are truly sustainable. It’s helpful to not only know the general category of an investment but also how it ranks in that category. There are a number of rating systems for sustainable investing, so it’s important to check the credibility of any ratings you find. 

EarthShare’s Green Rating for Funds is one of the most recognized rating systems, and it’s free to use. Just plug in the name of the fund you’re interested in to see its rating. This system evaluates mutual funds on seven different criteria related to sustainability.

You can also contact the investment managers of funds or stock that you’re considering to ask about their sustainability track records. 

Good Company Culture

When you’re investing, it’s important to ask yourself not just how profitable a company is but also how it treats its employees. Are the workers treated well? Are they given benefits? Are they treated fairly? 

These factors can affect the company’s long-term success. 

To find out more about how a company treats its employees, you can check out its corporate social responsibility (CSR) report. Many companies now publish these reports online so that anyone can read them. You can also ask to be put on a company’s email list so that you can receive the report directly. 

Not only is it helpful to know how a company treats its employees but it’s also helpful to know what standards it’s using to make its business decisions.  

Track Record of Paying Dividends

Some stocks are long-term investments while others are more short-term. If you’re looking for a long-term investment, then dividends aren’t as important. However, if you’re after a short-term investment, dividends are a great way to make a little extra money. 

Dividends are a recurring payment that some companies make to shareholders. It’s usually a small amount—it might not be enough to cover your monthly expenses, but it’s something. 

Reduce Carbon Footprint

If you’ve been reading up on green investing, then you’ve probably heard that investing in companies in the renewable energy sector or those that are providing less carbon-intensive production processes is a great idea. However, there are a few things you should keep in mind. 

First, you need to decide whether to invest in a stock or a fund. Stocks are generally better for long-term investing, while funds are better for shorter periods. 

Next, you need to consider the different indices that track renewable energy. There are two main indices that track renewable energy: the S&P Clean Energy Index and the NASDAQ Clean Energy Index. Both are good places to start looking for renewable energy investments.

Good Customer Service

As an investor, you want to invest in an accountable business where customers can get in touch with a representative when they need to ask questions or report any problems. 

You can find out more about how a company treats its customers by reading its social responsibility report. Again, you can also sign up for email alerts to receive this information directly. 

It’s also helpful to read up on customer reviews of a company. You can find these on many websites, including review sites like Yelp and TripAdvisor.  

The Bottom Line

It can be easy to get lost in the numbers when you’re considering investing, but it’s important to remember that these investments affect real people. 

It’s also important to remember that sustainable investing is often more expensive than non-sustainable investing. You’re paying a premium for the good that these investments do. 

If you’re investing in sustainable funds or stocks, you’ll likely see a difference in your returns over a longer period of time, but it’ll be worth it.