Investing in our future
How do we invest in a socially-responsible and profitable way?
We should never underestimate the power of our money. Money is a tool we can use to effect the changes we want to see in the world, and the vessel through which we operate are businesses and corporations. It’s therefore so important that the businesses we support — in both our spending and investing of money — are a reflection of our own values.
Capitalism (or more specifically, consumerism) is the source of many of the world’s environmental problems. Whilst it may not be a perfect economic model, it appears to be here to stay, and so if we’re going to invest, we may as well support companies that are aspiring to make a positive impact on the world.
There are many ways to invest in a sustainable way but I’m going to focus on two of the most simple: funds (stocks & shares / bonds) and seeds.
Fund investing
The more conventional (and less risky) way of investing is through stocks & shares and bonds. Morningstar now give a lot of the larger funds a sustainability rating based on how ethical the companies within that portfolio are, which is a really useful time-saver for the socially-conscious investor. Look out for environmental, social and governance (ESG) funds; these are generally the ones you want to be going for, although the criteria to be categorised as ESG is far from ideal so be sure to have a look at which companies form part of the fund before investing!
Seed investing
The other, more risky but more fun, way of investing is to choose startups who are looking for seed money. Crowdcube and Seedrs are the two largest platforms for this in the UK, and often host environmentally-driven entrepreneurs and companies on their sites. There’s the potential to make huge gains, but equally lose everything, so be sure to manage the amount you invest in line with your appetite for risk (my rule is that I don’t invest anything that I’m not prepared to lose).
The great thing about seed investing is that it really feels like you’re in control of your money. You can have a look at the business case and financials, scope out the market, read up on the CEOs credentials and make a (kinda) educated guess as to whether or not the company will flourish. If you choose the EIS or SEIS eligible shares, then you can claim back 30% and 50% respectively from the government.
As individuals, we can often feel powerless in the face of massive corporations and governments. What we need to realise though is that they respond to our demands. We have the power to choose where and how our money is spent, so let’s invest in businesses that share our vision of a cleaner future.
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