Common questions typically arise when considering ethical investing: 

    • How do you select investments that align with your values?
    • What are environmental, social, and governance (ESG) factors, and why are they crucial for ethical investing?
    • How can you measure the social or environmental impact of your investments?

    EP Wealth financial planning advisors can provide answers to these questions and help you create a portfolio that reflects both your financial ambitions and ethical priorities.


    What Is Ethical Investing?

    Ethical investing is for individuals who want to make a positive difference in the world while building wealth. This investment strategy focuses on companies and industries that adhere to high moral, social, or environmental standards.

    An ethical investor will prioritize companies whose values align with their own, such as those that treat employees fairly, promote sustainability, or engage in responsible corporate behavior. 

     

    Aspects of Ethical Investing

    Ethical investing typically involves three aspects: evaluating ESG factors, impact investing with companies known for positive practices, and exclusion of controversial industries.

     

    Consider ESG Factors

    ESG stands for Environmental, Social, and Governance, which are the three key factors used to evaluate the sustainability and ethical impact of an investment in a company or business.

    • Environmental factors look at how a company handles issues like climate change, resource conservation, and pollution.
    • Social factors assess how a company treats its employees, supports communities, and promotes diversity and human rights.
    • Governance examines corporate leadership, transparency, and ethical decision-making, such as how the company manages executive pay and shareholder relations.

    Investors can access this information through ESG ratings provided by research firms such as MSCI, Sustainalytics, and Bloomberg, which analyze and score companies based on these criteria. Many companies also publish ESG reports publicly on their websites, detailing their initiatives and performance.

     

    Impact Investing

    Impact investing is a strategy that shifts your money into companies, organizations, or funds that provide measurable benefits to society or the environment while also aiming for financial returns. Companies that are attractive to impact investors are those that:

    • Invest in renewable energy projects
    • Commit to using recycled materials
    • Promote fair labor practices
    • Reduce carbon emissions
    • Show dedication to social justice issues

    By supporting businesses that take measurable action to improve societal and environmental conditions, your investments reflect your values and support sustainable progress.

     

    Exclusion of Controversial Industries

    People interested in ethical investing typically avoid companies or industries that are associated with negative social or environmental impacts. These often include:

    • Fossil fuels (oil, gas, and coal) due to environmental concerns.
    • Tobacco companies because of public health issues.
    • Weapons and defense industries, particularly those involved in the production of firearms or military equipment.
    • Gambling due to concerns about addiction and social harm.
    • Alcohol companies, which some investors avoid for ethical or social reasons.
    • Companies with poor labor practices, such as those linked to human rights violations, sweatshops, or unsafe working conditions.


    Explore Ethical Investing with EP Wealth

    Today more than ever, investors are seeking ethical investment management practices to make a positive impact. If you’re interested in exploring this strategy, contact EP Wealth today to get started. Learn how we can help you align your portfolio with both your financial goals and your values.

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    • Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
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    • Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
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