Select Page

Like most other areas of our lives, finances, and investing can also directly or indirectly impact the environment, society, and governance. The ESG factor plays an important role when you consider sustainable and ethical investing options. As an entrepreneur, it’s vital that you keep in mind these impacts for the betterment of practices in your company.

Define your values and goals. It is impossible to control every factor, whether in personal life or business. It really helps if you have a guideline and criteria to follow. Once you know your company’s morals and goals, you can incorporate the ESG factor and adjust the parameters. The defining factor is knowing what impact on nature and social aspects you want to leave and what you consider ethical.

Do your research. Find investment options that align with your values and goals. Some funds explicitly define their ESG criteria, and some also help you with the screening processes. The better information you have on the social and environmental effects of financial measures, the more informed decisions you can make in sustainable investments.

Get an impact assessment done. When you do your research, don’t just stick to values and ethics. Understand the real-world implications of various investment options. Try to evaluate how multiple companies affect nature. Study the social implications. The more you can assess the results, the better you can predict the impacts.

Consider thematic investing.  When your values and principles are clear, you can choose which causes you want to support. Build specific themes around your chosen ideologies and map your standards against them. You can start by selecting the themes that most resonate with you and eventually pan out into broader domains. This way, you can focus on specific areas while remaining aligned with your core values and goals.

Avoid controversial industries. While not all businesses are going to be in perfect alignment with your values, there are a few companies that might stretch beyond mere ethical conundrums. The commonly controversial industries often involve topics that have the maximum pushback from all sectors of society. This could include industries like drugs, tobacco, weaponry, fossil fuels, etc. Choose wisely the sectors that are not a direct controversy to your values.