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I am not a big shopper. That said, when I do shop, I look for presents that pay it forward. What do I mean by that? Call it values-based shopping. When shopping for gifts, I look for companies and brands that follow Environmental, Social and Governance (ESG) principles that I prioritize.
ESG is a term that is often used to describe socially responsible investing. While you may have only recently heard about ESG, it has actually been around since the early 1900’s when the Methodist Church invested in the stock market and decided to avoid companies involved in alcohol and gambling. It became more mainstream in the 1950’s and 1960’s when pension funds managed by the trade unions recognized an opportunity to affect the wider social environment using their capital assets. In the U.S., the International Brotherhood of Electrical Workers invested their considerable capital in developing affordable housing projects, while the United Mine Workers invested in health facilities.¹
In the 1970s, the worldwide abhorrence of the apartheid regime in South Africa led to one of the most renowned examples of selective disinvestment along ethical lines. As a response to a growing call for sanctions against the regime, the Reverend Leon Sullivan, a board member of General Motors in the United States, drew up a Code of Conduct in 1971 for practicing business with South Africa.²
Today, ethical considerations and alignment with values remain common motivations of many ESG investors but the field is rapidly growing and evolving, as many investors look to incorporate ESG factors into the investment process alongside traditional financial analysis.³ To learn more about what is (and isn’t) ESG, please visit https://www.msci.com/what-is-esg.
So, back to shopping! On company websites, I look up brands and stores to review the ESG principles that are important to me. I look for company ethics that emphasize positivity and giving back to the community. For example, I like to shop a particular brand of clothes that donates 10% of their profits to charity. I try to find stores with fair labor and sustainable business practices, made in the USA, and ones that care about the environment by reducing waste and recycling. My hint is to look at the company website and read about the company story, core values, and mission statement.
On a related note, I have also recently updated my own personal portfolio to mutual funds and ETFs that emphasize ESG principles as well. If you’d like to learn more, please let me know!
¹,² Wikipedia: Environmental, social and corporate governance MSCI:
³ https://www.msci.com/what-is-esg
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