Every dollar you invest says something. It funds businesses, fuels industries, and supports practices—whether you realize it or not. If you care about the planet, human rights, diversity, or ethical corporate behavior, your investment portfolio is one of the most powerful tools you have to make a statement.
Aligning your investments with your values—often called values-based investing—means choosing investments that support what matters most to you, while still pursuing strong financial returns. And thanks to the growth of sustainable finance, it’s easier than ever to create a portfolio that feels just as good as it performs.
This guide walks you through what values-based investing is, the different approaches you can take, and how to build a portfolio that reflects your beliefs without sacrificing long-term growth.
Contents
What Is Values-Based Investing?
Values-based investing means intentionally choosing investments that are aligned with your personal, ethical, or social values. It’s not about giving up returns or settling for “feel-good” stocks—it’s about investing with purpose.
Common themes include:
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Environmental sustainability
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Social justice and human rights
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Gender and racial equity
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Ethical labor practices
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Religious or faith-based criteria
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Corporate transparency and governance
Values-based investing can include avoiding companies you disagree with (negative screening) or actively choosing companies that are driving positive change (positive screening).
Types of Values-Based Investing
1. ESG Investing (Environmental, Social, Governance)
Focuses on companies with strong ESG scores. Evaluates:
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Environmental: carbon footprint, waste management
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Social: diversity, labor rights, customer data privacy
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Governance: ethical leadership, anti-corruption
Best for: People who want a mix of purpose and profit, with mainstream accessibility.
2. SRI (Socially Responsible Investing)
Screens out companies involved in harmful or controversial industries like:
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Tobacco
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Weapons
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Fossil fuels
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Gambling
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Pornography
Often rooted in moral, ethical, or religious beliefs.
Best for: Investors who want to avoid profiting from sectors they strongly oppose.
3. Impact Investing
Invests directly in companies or projects that aim to solve global challenges—clean water, affordable housing, renewable energy, etc.
Focuses more on social/environmental outcomes than on returns.
Best for: High-conviction investors who want direct change, often through private equity or specialized funds.
4. Faith-Based Investing
Focuses on investments that align with specific religious teachings or values, such as:
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Avoiding alcohol, gambling, or debt-based businesses (Islamic finance)
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Promoting stewardship, compassion, and community support (Christian funds)
Best for: People looking to align investments with faith and spiritual beliefs.
Why Align Your Investments with Your Values?
1. Impact
You support businesses that reflect your ethics—and help fund solutions to global issues like climate change, inequality, or corruption.
2. Integrity
Your money matches your beliefs. You’re not profiting from companies you morally disagree with.
3. Influence
Shareholders have power. Values-aligned investing allows you to vote on company policies and join broader movements for corporate change.
4. Risk Management
Companies with poor ESG scores may face lawsuits, scandals, or regulatory fines—making them risky long-term investments.
5. Market Opportunity
Sustainable businesses often outperform in the long run. Green energy, ethical tech, and diverse leadership are correlated with growth and innovation.
How to Align Your Investments with Your Values
Step 1: Clarify Your Core Values
Start by asking:
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What causes or issues do I care deeply about?
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Are there industries I don’t want to profit from?
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What kind of world do I want my money to help build?
Popular value areas:
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Climate change and clean energy
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Gender and racial equality
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Human rights and anti-slavery
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Animal welfare
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Religious integrity
Step 2: Assess Your Current Portfolio
Use tools like:
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Morningstar Sustainability Ratings
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As You Sow’s “Invest Your Values” platform
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Yahoo Finance’s ESG tabs
These show how your mutual funds, ETFs, or stocks score on sustainability, diversity, emissions, and more.
You may be surprised to find that some of your current investments don’t align with your values.
Step 3: Choose Your Strategy
You have options:
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Switch to ESG ETFs or mutual funds: These funds screen for companies with strong ESG practices.
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Avoid certain industries: Look for SRI funds that exclude sectors you want to avoid.
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Invest in impact funds: These target specific goals like clean energy or social housing.
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Use a robo-advisor: Many platforms like Betterment, Ellevest, and Wealthfront offer ESG portfolio options.
Step 4: Select Your Investments
Top ESG or values-based fund examples:
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Vanguard ESG U.S. Stock ETF (ESGV)
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iShares ESG Aware MSCI USA ETF (ESGU)
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Parnassus Core Equity Fund (PRBLX)
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TIAA-CREF Social Choice Bond Fund (TSBIX)
Faith-based fund examples:
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Ave Maria Mutual Funds (Catholic)
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Amana Funds (Islamic)
Impact-focused funds:
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Calvert Impact Capital
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Green Century Balanced Fund
Step 5: Monitor and Adjust Over Time
Check in yearly to ensure your investments:
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Still reflect your values
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Maintain good performance
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Adapt to evolving standards and new opportunities
ESG scores and fund strategies may change—so stay informed.
Values-Based Investing Myths
Myth: You’ll earn lower returns.
Not necessarily. Many ESG and SRI funds perform as well or better than traditional funds over time—especially during downturns.
Myth: It’s too hard to build a values-aligned portfolio.
It’s easier than ever with ESG-focused funds, robo-advisors, and online tools.
Myth: It’s only for the rich.
You can start with as little as $1 through apps like Betterment or Fidelity.
Myth: Values-based investing is political.
Values vary widely. Whether your concern is climate, faith, liberty, or family, you can build a portfolio around it.
FAQs About Aligning Investments with Values
What if a fund includes companies I disagree with?
Use fund screeners or tools like “As You Sow” to find funds that match your criteria more closely—or consider custom portfolios.
Are values-based portfolios available in retirement accounts?
Yes—many 401(k)s and IRAs now offer ESG or SRI options. If yours doesn’t, you can use an IRA or taxable brokerage to align your investments.
Can I create a values-based portfolio with ETFs?
Absolutely. There are ESG ETFs for U.S. stocks, international markets, bonds, and more.
It’s when investors influence company behavior by voting on policies or engaging with management—many ESG funds do this on your behalf.
Do robo-advisors support values-based investing?
Yes—Betterment, Ellevest, Wealthfront, and others offer socially responsible portfolios you can customize to match your beliefs.
Final Thoughts: Invest in What You Believe In
You don’t need to choose between wealth and your values. Values-based investing lets you pursue financial goals while supporting causes you care about.
It’s not just about avoiding harm—it’s about actively doing good. Your money has power. Aligning your investments with your values turns that power into purpose.
Whether you’re concerned about climate change, human rights, or faith-based principles, there’s a way to invest that reflects your priorities—and helps you sleep better at night.