In this months series of blogs we are looking at different the ways you can use your money as a force for good. From ethical saving and borrowing to socially responsible investing. From sustainable & conscious spending to making decisions about the companies you make money from (or even create). Where you can factor in your values and make, earn and save with companies designed with social, environmental values and stakeholder governance in mind.
Let’s start with a brief overview of the options available and over the next few weeks we’ll explore each of the areas in more depth.
Start with You.
What are you looking to achieve? Are you looking to do less harm? Are you looking to do more good? Both sides of the same coin but that intention will lead to different saving, spending & investing habits. Are you wanting to avoid companies that deal in tobacco or arms, or actively support companies using sustainable technologies? To avoid companies that fail to treat employees well or support those actively seeking change?
The key word in that sentence was “You”.
These are highly personal decisions rooted in your values, your experience, your politics & your beliefs. Identify your Values first and then you can direct your money in support of those beliefs and effectively “vote with your money” .
- First identify your personal values and beliefs
- Secondly Prioritise what you wont compromise on and what you will
- Thirdly let’s look at 4 ways you can use your money to do the good that you want to do.
In simple terms this is choosing a bank to save or borrow from who’s ethics, policies and actions match your values. Read more here 3 Switches for more Ethical Banking
It could be selecting a bank to save or borrow from that refuses to lend to companies who manufacture weapons or fund fossil fuels and actively choose to lend to those investing in renewables. For example Banks that describe themselves as ethical not only wont lend to negative impact companies but are much more active in lending to positive impact companies aimed at reducing climate change and supporting community and social projects
Building societies and App-based banks are currently much less involved in lending to negative impact companies than the big banks, by virtue of being smaller or having specific lending regulations, rather than a deliberate ethical stance.
Check out Ethical banking comparison sites and make sure the one you choose is covered by the FSCS government compensation scheme.
How Money Smart are You?
Making deliberate conscious decisions to spend and buy products from companies in line with your own set of personal values.
For example, choosing to spend on sustainable fashion or with companies that reuse or avoid plastic. Avoiding or boycotting companies that are misaligned with your politics or social beliefs such as treating employees poorly or causing environmental damage.
This can be challenging, especially when you are trying to achieve multiple gaols with differing values. It takes research but becomes quicker and easier with practice.
- Keep up to date with news and current affairs
- Set Google alerts on key values for you so you stay informed on news around that topic
- Follow on social media brands you know already match your values and review their network of following to connect with other conscious accounts
- Use comparison sites for ethical ratings of products and companies
ESG or Impact Investing
Environmental, Social & Governance (ESG) investing refers to a set of criteria that investors can use to evaluate a company’s Environmental, Social and Governance practices in order to decide whether to invest in them or not.
ESG Funds include shares in a diverse range of companies that meet, to differing degrees these ESG criteria. It is unlikely one company will pass all tests so understanding your own values and priorities is key, as is subsequent research.
Environmental criteria could include a company’s energy usage, waste, pollution, natural resource conservation, and treatment of animals.
Learn to LOVE your Money and Make, Save & Grow MORE
Social criteria look at the company’s stakeholder relationships. For example does the company support it’s local community? Do the company’s working conditions actively demonstrate it cares for it’s employees well-being, health, safety and employment rights. Does it select suppliers that mirror the same values?
Governance looks at whether a company uses transparent accounting methods, involves shareholders on key issues and if business practices are legal and acted out with integrity.
Impact investing is an approach that seeks financial returns whilst also creating a positive social or environmental impact. So rather than screening out perceived negative attributes it actively looks for both purpose and profit.
I recommend working with a financial adviser for this as their role is to understand your personal situation &, your goals. They have access to research to ensure the ESG or Impact funds they recommend are regulated and suitable for you.
Socially Responsible Business
We’ve talked about saving, spending and investing your money in line with your ethics and values but we can also look at where and how we are making and earning it.
Choose to work for a company – or set up your own business – that actively embodies ethical and social governance and consider all stakeholders including their employees, customers, investors, suppliers, communities and environment in their vision, values, decision making and policy.
This doesn’t mean you have to work in climate change or social justice, but does the corporation you work for actively seek to reduce environmental damage, does it take care of its employees, pay them fairly and justly? Does it choose suppliers that mirror these ethics? Are they considering their wider community and environment in terms of giving back, sustaining or at the very least, not damaging.
Money as a Force for Good
You can put your money where your heart is and use your money as a force for good. Start by understanding what is most valuable to you, researching companies that act in line with your values and directing your money toward those. I’ll be sharing more details on all of these areas over the coming weeks so hit subscribe and follow below.