Investing can be daunting, especially when aligning your investments with your values and beliefs. But imagine a world where your assets could grow your wealth and positively impact society and the environment. Fun, right? That's the power of value-based investing.

What is value-based investing? 

Value-based investing means investing in businesses that share your vision for a better world. It involves investing money into companies that prioritize environmental conservation, promote renewable energy, and support human rights. This article will explore ten ways to invest in line with your values and beliefs, with great examples to learn.

1. Impact Investing

Impact investing is investing in companies, organizations, or funds to create positive social and environmental impact and generate financial returns. Examples are businesses promoting renewable energy, ecological conservation, and social justice. Effect investing can be done through private equity funds or publicly traded companies.

Example

If you're passionate about reducing plastic waste, consider investing in a company that produces sustainable packaging materials. One such company is Ecovative Design, which uses mushroom-based materials to create eco-friendly packaging solutions.

2. Socially Responsible Investing (SRI)

This strategy aims to align investments with the investor's ethical, social, and environmental values. It involves avoiding investments in companies that engage in harmful activities or promote products or services that go against the investor's beliefs, such as tobacco, gambling, or weapons manufacturing. SRI can be done through mutual funds or exchange-traded funds (ETFs) focusing on socially responsible companies.

Example

Are you concerned about animal welfare? Consider investing in a mutual fund that screens out animal testing companies. One such fund is the S&P 500 ESG Index Fund, which invests in companies prioritizing environmental, social, and governance factors, including animal welfare.

3. Sustainable Investing

It involves investing in businesses with a long-term view of the environment and society and seeking a positive impact. These are companies committed to sustainable practices, such as reducing their carbon footprint, promoting sustainable resource management, and supporting human rights. This type of investing can be done through mutual funds or exchange-traded funds (ETFs) that focus on sustainable companies.

Example

You might invest in a renewable energy company like Tesla, which is focused on reducing carbon emissions and promoting sustainable transportation. Or invest in a company like Patagonia, committed to sustainable supply chain practices and donates 1% of its sales to environmental causes.

4. Community Investing

Community investing involves investing in local communities to create social and economic development opportunities that benefit the community, such as affordable housing, small businesses, and microfinance. Community investing can be done through community development banks, credit unions, or investment funds.

Example

You might invest in a community development fund that provides financing for affordable housing projects in your local area. One such fund is the Calvert Community Investment Note, which provides financing for affordable housing, small businesses, and community development projects.

5. Gender Lens Investing

Gender lens investing is investing in companies prioritizing gender equity, such as companies with strong female leadership or promoting gender diversity in the workplace. This approach involves investing in businesses committed to advancing gender equality and empowering women. Gender lens investing can be done through mutual funds or exchange-traded funds (ETFs) focusing on gender equity.

Example

Invest in a company like The Female Founders Fund, which focuses on investing in companies with female founders or gender-diverse leadership teams. This fund provides financial support and resources to women-led startups and promotes gender equity in the tech industry.

6. Faith-Based Investing

Faith-based investing is investing in companies that align with your religious beliefs, promote ethical business practices, or support humanitarian causes. Through this approach, you can invest in businesses that share your spiritual values and seek to make a positive impact. Faith-based investing can be done through mutual funds or separately managed accounts focusing on companies aligning with your religious beliefs.

Example

If you're a member of the Catholic Church, you might consider investing in a mutual fund that follows the U.S. Conference of Catholic Bishops' socially responsible investment guidelines. One such fund is the Ave Maria Catholic Values Fund, which invests in companies that align with Catholic teachings on social justice and human dignity.

7. Employee Ownership

Employee ownership is investing in companies owned and controlled by their employees. This approach involves investing in businesses that promote worker empowerment and democratic decision-making. Employee ownership can be done through publicly traded companies with employee stock ownership plans (ESOPs) or privately held companies that offer employee stock options.

Example

WinCo Foods is one such employee-owned grocery store chain. WinCo Foods offers stock options to its employees and gives them a say in the company's decision-making process.

8. Divestment

Divestment is the opposite of investment, involving removing funds from companies or industries that go against an investor's values. This approach consists in selling stocks, bonds, or other assets that support companies or sectors that engage in harmful practices or go against the investor's beliefs. Divestment can be done through mutual funds or exchange-traded funds (ETFs) that exclude specific industries, such as fossil fuels or weapons.

Example

If you're concerned about climate change, consider divesting from companies that produce or use fossil fuels. One such fund is the Fossil Free Funds, which screens out companies that extract or burn fossil fuels and provides a list of fossil-free investment options.

9. Direct Investment

Direct investment involves investing in individual companies or projects aligning with your values and beliefs. This approach consists in researching and selecting companies prioritizing social and environmental impact and financial returns. Direct investment can be made through angel investing, venture capital, or crowdfunding platforms.

Example

Consider investing in a social enterprise like Warby Parker, which sells eyewear and donates a pair of glasses to someone in need for every team purchased.

10. Philanthropy

Philanthropy is giving money or resources to charitable organizations or causes that align with your values and beliefs. This approach involves supporting causes that are important to you and making a positive impact on society. Philanthropy can be done through charitable foundations, donor-advised funds, or direct giving. With generosity, there is no immediate return on your investments, but you get to build a name and reputation that supersedes financial gains and creates a lasting legacy. 

Example

If you're passionate about education, consider donating to a scholarship fund that supports underprivileged students. Or you might contribute to a non-profit organization providing clean water to needy communities.

Conclusion

Investing in line with your values and beliefs is possible through various approaches, from impact investing and SRI to philanthropy and direct investment. By aligning your investments with your values, you can positively impact society and support the causes that matter to you.