Socially Responsible Investing (3 Ways To Do It!)

what's up everyone I'm rose and welcome back to my channel the number one place for financial education empowerment and inspiration in this video I'm gonna talk about how to do socially responsible investing so that you can invest and put your money to work without compromising your values thankfully there are a lot of socially responsible investing options out there so that you can make a great return on your money while also taking care of the environment being ethical and things like that because nobody wants to be a greedy evil person who only cares about making money don't you care that you're investing in things that support gun violence Wars and global warming no first I'm gonna talk about what socially responsible investing is then I'm gonna show you how to do socially responsible investing and finally I'll also talk about how socially responsible investing compares to regular investing in terms of the returns you can expect from your investments so with that let's get right into it I want to start off by defining socially responsible investing because this is a very loose term that can mean different things to different people so let's get clear on it in general it means investing in companies that do good things in the world or at least companies that aren't doing bad things in the world back in the day this used to be as simple as excluding companies that manufacture guns or sell alcohol tobacco or do gambling but we all know that being socially responsible means so much more than that it's a lot more nuanced so over the years socially responsible investing has become a lot more sophisticated and now investors can actually use a set of quantifiable metrics called ESG to make investing decisions yes G stands for environmental social and governance and it's a set of quantifiable metrics assessed by kind of outside data researchers and they assess companies and give them an ESG score and this score has three components e is for the environmental component of their score and this can mean the company is actively doing things to reduce carbon emissions or fight climate change it can also mean that the company is moving towards renewable energy sources and just anything of that nature the s in ESG stands for social factors so this part of the score will assess how a company treats its employees also how it treats its stakeholders vendor is just anyone who's involved with the company generally a company with a high score in the S category has things like fair wages good working conditions in its factories in other words no sweatshops and it treats its customers well and things like that and then the last part of the ESG score the G which stands for governance tells you how honest the company is in terms of you know how likely they are to do anything that's corrupt or do fraud cooking its books or paying its CEOs ridiculous compensation at the expense of its shareholders and things like that so altogether the ESG criteria helps investors find companies with values that match their own and every company gets an ESG score and I'll show you in just a minute where to look it up but as you will see no company's actually a hundred percent in all categories of the ESG score so it's important for you to decide what is important to you is it environment is it companies that promote equality and diversity are you really passionate about human rights or animal welfare everyone has something that is important to them for me it's the environment and gender equality so I really love investing in companies that score high in those categories so I want you to let me know just drop it in the comments cuz it's really cool to hear how other people are reflecting their values in their investing so drop it below and let me know which which of the values are most important to you so now that we've defined what socially responsible investing is and now that you know that there's actually a quantifiable score that tells you exactly how socially responsible a company is now let's talk about how to actually do it there's three ways to invest in a socially responsible manner the first way is by investing in the individual stocks of companies that you know are socially responsible the way you would do that is by first checking the ESG score of that company so for example if you want to invest in Apple then what you can do is go to Yahoo Finance type in the ticker of the stock that you want to look up so we're looking at Apple you type in a APL and then you go to the sustainability tab of their stock page and there you'll find their ESG score all laid out for you so you see that Apple scores pretty much above average relative to their peers and they have a pretty high score in both the es and G categories so you know right then and there that this is a good ESG score and that Apple is doing a lot in all three areas of socially responsible responsibilities another thing you can do is to check if the company that you're considering investing in is involved in any sort of activity that might automatically be deemed not socially responsible so for example if you're totally against animal testing and you're considering investing in I don't know Pfizer then you type in their stock ticker into the Yahoo Finance search bar go to their sustainability tab as usual and you can scroll a little bit down and you'll see whether this company is involved in any of these sort of red flag activities so you see here it says you know they they're not involved in weapons or gun making or tobacco but they are involved in animal testing says yes so that would be a way for you to immediately know whether this is a socially responsible company or not so investing in individual stocks is probably the most customizable way to to do socially responsible investing however that's not for everyone because you also need to know how to assess individual companies and do research and all of that so if you're more of an index fund diversification kind of person then this next strategy is for you this next strategy where you invest in socially responsible index funds is a really easy way to just have a fund do all the screening for you so that you know that whatever you have in that is already screened for things like tobacco alcohol gambling weapons GMO nuclear power companies and they've also done an additional measure of screening for high ESG scores for example these three ets es GD es GE and s USA are ETS that give you exposure to the world stock markets but they're already pre-screened to have only companies that have high ESG scores if you invest in any of these three ETFs you can rest assured that all the companies in there are going to be relatively high in the ESG category and doing their best to contribute to the environment and equal pay social causes and and governance however if for example if you are really really passionate about environmental causes and carbon emissions and reducing and preventing climate change