What Does it Mean to Be a Conscious Investor?

March 13, 2019

Why a values-driven approach to investing can serve you well. 

What is conscious investing? It’s a way to invest your money in companies making a difference in the causes you care about, and not the ones that don’t. 

Why should you become part of the conscious investing movement?  Here at COIN, we think the answer is simple:

Speaking of using our values as a guide, we try to walk the talk here at COIN, every day. Specifically, we try to be inclusive, transparent, and impact driven in all that we do. So whether we’re choosing which companies to feature in our conscious investing portfolios or opting to keep our annual fees low, we keep our values top of mind.

And when it comes to your own investment decisions, here’s why a values-driven approach can also serve you well.     

The History of Socially Responsible Investing—and Its Future

Just a few years ago, investing to make a difference wasn’t really a thing. Sure, there were people who aimed to invest in a sustainable and socially responsible way, but their investment options were mainly focused on not doing harm. So, when someone thought about making a positive impact with their investments, it usually meant they’d avoid investing in companies that didn’t match their values, as a boycott of sorts. 

For example, in the past, a person who was concerned about the greater good would have avoided putting tobacco companies in their investment portfolios, but that might have been as far as it went. Additionally, not too many people were aware that socially responsible investments were available, so overall, an impact-driven investment strategy was considered a pretty niche way to invest your money.

Today, the momentum has shifted. More and more investors today believe it’s not enough to avoid investing in companies that have harmful policies or products; their investments must actively work toward the change they want to see in the world. 

Who’s helping to shift that momentum and leading the demand for change? Younger investors, it turns out. 

According to CNN Business, “as Millennials get older, and wealthier … expect there to be an even greater push for impact investing. The impetus is also coming from younger employees at banks, insurers, and foundations who see investing in areas such as education, gender equality, fighting hunger, and climate action as compatible with making a healthy return.” 

It’s also important to note that Millennials are the largest generation in America. This means that a lot of new socially aware investors could start investing in the years to come. Because they’re so young, they’ll also have a lot of time to leave their money invested in the market. This could be a big deal: Think of it as strength in numbers, where people with significant amounts of money will invest together in a proactive and impact-focused way. That sends a powerful message and has the potential for real change!

From Your Purchases to Your Investments, Your Money Communicates Your Values 

While many people find it meaningful to be part of a larger movement, it’s also important to understand the impact of our individual actions. So, investors often want to know the impact their own money is making. 

Think of conscious investments as an extension of our buying habits. To start, did you know that 56% of Americans stop buying from companies they think are unethical? This means that more than half of Americans will find a new retailer, brand, or service if they disagree with the offending company’s values. 

If a supermarket chain doesn’t offer equal pay for equal work, for example, many Americans would start grocery shopping somewhere else. Similarly, if a car company gets fined for lying about their cars’ fuel emission standards, many drivers steer clear of that brand the next time they need a new car. You get the idea. Approaching spending this way is a way of saying we have a choice in how we spend our money, and we won’t support businesses that don’t align with our values.  

This awareness about what our money supports, though, doesn’t always apply to how we invest. In fact, 40% of Americans don’t know what they’re invested in! This means an investor could have stopped shopping at that supermarket with the unequal pay policies, yet still be investing in that supermarket or its parent company. In other words, this person could be carefully planning where they shop and how they spend, while the whole time their investments are undercutting their other money decisions. Because they’re unaware of how they’ve invested, their money may actually be making the problem worse, not helping to solve it. With conscious investing, though, they know how they’re invested and that their investments are also aligned with their values.  

What Will Your Investments Support? 

By becoming a conscious investor, you’ll be able to invest in companies making a difference, not the ones that don’t. You’ll be looking at your investments as a way to build your financial future, while also supporting the causes you care about. With conscious investments, you’re making sure that your money isn’t being passively invested in companies you wouldn’t support with your spending money. 

Think of conscious investing as a way to understand exactly which companies you’re invested in, and also to express your values. When you think about your future, what do you hope for yourself, your loved ones, and the world? Maybe you’re passionate about Gender Equality, and want to build a strong future for women and girls. Or you’ve seen first-hand the impact pollution can have on our oceans and rivers, and want to promote a world that has Clean Water for all. If you live or work in a city, investing in Modern Cities with sustainable infrastructure and inclusive communities may make sense for your investments.  

As conscious investors, we have a motivated community, strength in numbers, and the power of knowledge on our side. To us, the choice is clear. Now, we want to know: What will your investments support?