There is a maxim in investing that we at For What It’s Worth (FWIW) have come to embrace: “All investing has an impact —the question is whether it is positive or negative.”
Over the last decade, there has been a growing recognition that investment capital could be a powerful tool to help shape the world we want — to address opportunities and challenges across society and across our natural world. This is evident in the explosion of ESG investing — investing that includes a focus on companies and funds that prioritize Environmental, Social, and Governance factors. And the best news for investors? A body of data is emerging from across the market demonstrating that ESG investments can outperform when it comes to returns.
But getting started with this form of investing can be daunting. If you, like so many other investors, are looking to build knowledge and confidence in this new space, we’ve got you covered. In a nutshell, that’s why we started FWIW, to bring together the latest tools, resources, and news you need to confidently align your investments with your values — and to make it fun and easy to understand. To help get you over the initial hump, we’ve pulled together straightforward tools you can use to kick off your journey towards investing in the world you want:
Tools to invest for sustainability
When researching possible investments, many investors use “screening” to ensure they both include (positive screening) and exclude (negative screening) certain types of investments to more closely align with their values. When it comes to carbon reduction, you can “screen out” funds that invest in gas, oil, and other extraction companies, if that is important to you. Similarly, you can “screen in” funds that invest in renewable energy or new technologies that seek to replace or compete in high emissions producing fields. Check out tools like this one from Fossil Free Funds, which allows you to search for funds in your investment portfolio. Or take a look at CDP, which for over two decades has run a global database for environmental disclosures which evaluates, scores, and ranks companies based on this data. And if you want to dig even deeper on individual companies, break out your Google Sheet skills and check out this Carbon Removal Corporate Action tracker from American University.
Tools to invest with a commitment to DEI
If you want your portfolio to reflect a commitment to DEI, it can be hard to know where to turn to find helpful data and tools. But valuable resources are starting to pop up, like Fortune’s recently introduced diversity measurement metrics, including a list of thetop 20 Fortune 500 companies on diversity. Using diversity and inclusion stats sourced from public disclosures, Fortune was able to identify which companies were the best at addressing 14 key metrics, including the percentage of people of color on the board, the percentage of women employees, and the percentage of employees with disabilities, among others. JUST Capital’s Corporate Racial Equity Tracker is another noteworthy resource as it monitors company commitments/actions to address racial equity. In addition, some have found Adasina’s free impact data set and shareholder advocacy nonprofit As You Sow’s searchable database with gender parity information for more than 3,000 ETFs good tools to help you invest with intention.
Tools to invest in employees and communities
Many investors want to make sure that the companies they are investing in are prioritizing the welfare of their employees, communities, and other stakeholders — not just company shareholders. ESG is a good framework to think of corporate behavior, and investors rely on ESG labels or ESG ratings to know about a firm or fund’s performance across many themes. The “G” in ESG covers everything to do with decision-making and leadership, including things like executive compensation, company policies, internal controls, management structure, etc. While there are a number of publicly available ESG score tools investors can use to gain insights into companies they are looking into, no method of measurement is perfect right now in the absence of good standards and regulations, but there are some good tools that can help you research specific issues to screen out bad actors or pick the best.
The folks over at JUST Capital have a great tool to rank the performance of America’s largest publicly traded companies on their interaction with their workers, communities, customers, shareholders, and the environment. If you want to invest in organizations that support their employees and community, every year Fortune and analytics firm Great Place to Work publishes a ranking of top workplaces. And finally, AFL-CIO’s CEO-to-Worker Pay Ratio and Median Worker Pay lets you find out the pay difference between the top boss and the typical employee at almost any public company.
We hope these tools are helpful, because honestly, we get it. Wanting to make sure your investments are aligned with your values but not knowing where to start is tough. But don’t worry, at FWIW, each week we send out a newsletter breaking down the information, tools and insights you need — no matter where you are on your investing journey. So you’ll be up-to-speed in no time!