Top Tips for Making an Impact With Your Money
Greening your investments doesn’t have to be intimidating!
By Asiyah Choudry
December 2, 2022
In August, our co-founder Bonnie Gurry participated in a webinar hosted by Raise Green to discuss how individuals can use their finances to create meaningful change. Bonnie was joined by panelists Hadassah Damien, Founder of Ride Free Fearless Money, Erika Williams, VP of Client Development at RSF Social Finance, and Sophie Nikitas, Investor Marketplace Associate at Raise Green, who moderated the panel.
The panelists offered practical advice for getting started with sustainable investing, the challenges of ESG, and beating analysis paralysis. You can watch a recording of the webinar here.
Here are our top four takeaways for making an impact with your finances.
1. Understand what investing means to you
Before committing your capital, consider who you are investing for and what you want your money to do. Are you investing for yourself in the short term? Are you investing for the planet in the long term? Once you’ve identified your investment goals, think about the types of returns you are looking for. Alongside a financial return, are you seeking to create a positive environmental or social impact? Once you have defined your investment goals and values, it will be easier to identify financial products that meet your needs.
2. Create an inventory of your financial products
Take stock of your finances by creating an inventory of your financial products including checking or savings accounts at banks, investments, and credit cards. Do you understand the climate impact of your financial products? Once you understand your finances, you can start by making one small change, like switching banks. If you regularly use a debit card, it will feel good to know that it’s from a bank doing good things with your money. Once you’ve tackled smaller assets, you can move on to larger assets like your 401(k). You can audit your finances annually to identify new areas to address.
3. “ESG” is not synonymous with climate-friendly
As the ESG product landscape expands, greenwashing is a growing concern. There is no uniform definition of ESG, nor is there any government oversight of ESG products in the US. Just because an investment product is labeled ESG doesn’t mean it’s climate friendly. ESG funds can have holdings in fossil fuels, so it’s easy for the average consumer to be misled. If you hold a green ETF or mutual fund, check out the fund’s prospectus for a complete list of holdings.
When it comes to ESG scores, it can be extremely challenging to make sense of the data. GreenPortfolio is developing a tool to help individuals make sense of the “E” in ESG metrics, so they can understand, at a fundamental level, whether an investment is climate-friendly or not. In the meantime, Bonnie recommends comparing a fund’s ESG score across rating providers for a more holistic understanding. If you’re looking for additional tips for avoiding greenwashing, check out our top strategies for avoiding greenwashed financial products.
4. Start small
With the wide range of sustainable investment vehicles on the market, it’s easy to struggle with analysis paralysis and feel like you need to optimize every dollar. If you want to start impact investing, you don’t need to go all in right away. Identify a dollar amount that doesn’t feel scary (even as little as $100) and invest it. Use this initial investment as an opportunity to learn about the different investment options that are out there.
Another option is to start with a financial product that you’re using most frequently, like a credit card. Even though it might be a smaller amount of money compared to an investment account, since you use it every day you can feel empowered knowing that you’re regularly making a positive impact.
If you’re looking for some investment options, Raise Green allows you to invest in clean energy projects and climate solutions with an investment minimum of $100. RSF Social Finance offers a social investment fund that enables you to support positive social and environmental outcomes while receiving a financial return. You can build your investment over time as you develop a better sense of what you’re looking for.
Fight climate change with your finances
At GreenPortfolio, we aim to empower you to understand the climate impact of your finances. If you’re interested in investing in climate solutions, check out our product recommendations, including companies, banks, credit cards, robo-advisors, and investment funds that align with a sustainable future.
Thank you to Raise Green for organizing this panel! We hope you feel empowered to use your finances to fight climate change.
Your money could be funding fossil fuels...or climate solutions.
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