Most of the time, investing is talked about as an act of self-interest. “Earn more.” “Retire comfortably.” “Build your wealth.” But where does the money go? Those dividends and gains come from somewhere, don’t they?
When you entrust your money to any bank or investment fund, it’s used to generate more value—either loaned out or invested in different companies, governments and other entities. The question for us as people who own those loans and investments is: Do those companies’ activities benefit our world and local communities or do they have a negative net impact?
Investing responsibly is about steering cash to companies whose business practices are sustainable.
Will you be giving your money to companies that extract profits from a community without benefiting society positively? Or, will you be fueling companies that have a positive social or environmental impact, that perhaps will help change our world for the better?
We all know of companies we respect. Whether it’s the small construction firm that has grown with the small city it helped to build, or the Silicon Valley tech company that’s changing how we grow fruits and vegetables sustainably, socially responsible investing is about choosing these kinds of companies on a broader scale.
How do you know companies are having a positive net impact?
What’s challenging about building a sustainable investment portfolio is the reality that a large company’s impact on society is multi-faceted. One company may have excellent management, prioritizing diversity and giving back to their community, but whose operations still harm the environment. Another might be carbon neutral but has a poor record when it comes to how it treats its workers.
That’s where targeting a broad impact can be a strong, balanced approach to socially responsible investing. Rather than prioritizing any one value over another, Betterment’s Broad Impact portfolio assembles funds with an ESG mandate (environmental, social, and governance) which equally weighs a company’s profile along all three pillars of ESG, and tilts towards companies with the best overall scores in each sector. We aim for the investments in your Broad Impact portfolio to represent the companies that have a broad positive impact across the global market.
Cool, right? Having a broad impact is a way of accounting for the pros and cons of many different companies and making a balanced choice, while maintaining a diversified portfolio with low expenses.
Start with the Broad Impact Portfolio to help grow your money responsibly.
Regardless of how you choose to invest, Betterment aims to help you align your money with your values. That means not only offering a socially responsible investing portfolio, but also helping you identify your goals and invest for them appropriately. Learn more about our guidance and get started saving for your future.