How to Include Sustainable Investing in Your Portfolio
As a person living in this world, perhaps you want to do something to make an impact on it! We all have values and causes that we care about, whether it’s being low-impact on our environment or supporting social causes that we believe in. Did you know that there’s a way that you can support these causes and also receive a return on it?
Sustainable investing is one way in which you can incorporate your values into your financial portfolio, and diversify it in more ways than one. Read on to learn more about sustainable investing, how you can incorporate it into your portfolio on a local level, and why it’s so important to your community.
*As a disclaimer, this is not investing advice and is meant for educational purposes only.
What is Sustainable Investing?
Sustainable investing is a form of impact investing, which is a strategy that is becoming increasingly popular among investors of all levels - from individual, unaccredited investors to large, institutional investors.
The basic premise of sustainable investing is that in addition to considering the return on an investment, you also think about the environmental, social, and governance (ESG) factors before making an investment decision.
This means that you can include your personal values and missions into what you invest in. You can literally put your money where your mouth is.
We should also note that sustainable investment isn’t an alternative to traditional investing. In fact, it adds to traditional concepts of investing while also incorporating ESG into the decision making process.
Looking for opportunities for investing in sustainable small businesses?
Join the Honeycomb investor newsletter for access to resources for small business investors and information about the latest small businesses looking for funding from investors like you!
Elements of Sustainable Investing
Environmental investing is one of the fastest-growing sectors of investing right now, on all scales. While you could invest in clean energy, have you considered investing in a local business that’s also making a sustainable environmental impact on your community?
Take Compostable LA, for example. They’re a composting company in Los Angeles that collects household food waste and composts it, diverting thousands of pounds of food waste from landfills every year.
In 2020, Compostable LA ran a crowdfunding campaign with Honeycomb Credit and raised $60,000 in investments from people in their community so they could expand their fleet of pick-up vehicles and grow as a social enterprise.
Owner Monique Figueiredosays, “I have 77 investors, not just one bank. And all 77 investors are investing because this is what they want to see in the community.”
There are a variety of causes that you can invest in through sustainable investing in small businesses. Think of some causes that are important to you: maybe it’s championing human rights, or supporting minority owned businesses, creating a more inclusive and diverse community around you.
By investing in small businesses, you can can have a direct impact on minority-owned businesses in your community and help lift up a generation of entrepreneurs who so often have to face many obstacles to achieve success.
Jason Ridgel, owner of Guidance Whiskey in Nashville, sees himself as a torchbearer for other Black entrepreneurs in the spirits industry.
“It’s my obligation [to lift up other minority-owned spirits brands], really. It’s the job. I take it that seriously,” says Jason. “I was given an opportunity to be one of the first - I call us the ‘freshman class’ of minority-owned brands in spirits, and we won’t live to see how this ends, you know. Being one of the first brands in the market, it’s my responsibility to hold the door open for those that are coming behind me. I feel that it’s our job and our duty, and that’s what we do.”
Guidance Whiskey raised $120,000 with Honeycomb to expand their whiskey brand into new markets and grow their sales team. Thanks to the investors who supported him, Jason is creating new jobs and new pathways for Black entrepreneurs looking to break into the spirits industry.
Looking at governance as a factor to sustainable investing means looking at how the businesses you wish to invest in hold themselves accountable to their employees and to their community.
A shining example of a small business that works to provide a healthy and postive workplace environment is Square Cafe, a brunch restaurant in Pittsburgh. Sheree Goldstein, owner of Square Cafe, pays her employees a living wage and benefits, and offers employment opportunities to individuals struggling with recovery from addiction or incarceration.
Furthermore, the restaurant itself is a safe place for people of all identities, especially those in the LGBTQ+ community, which is plain and evident by the array of flags that fly on the restaurant’s front facade.
How to invest sustainably in your own community
While some blogs will tell you you can incorporate sustainable investing into your financial strategy by talking to your financial advisor or using a robo-advisor with an ESG option, there’s another way that you can use the tenets of sustainable investing on your own street.
Investing in a small business that shares your values of sustainability is one way in which you can use sustainable investing on a micro-scale and influence your community.
Honeycomb Credit gives you the opportunity to invest in small businesses across the nation (and potentially in your community) that are making a difference in their community by offering the opportunity to invest in them.
These investments are a fixed-income investment in a crowdfunding campaign. Essentially, you can contribute as little as $100 (though the average Honeycomb investment is around $1,000) to a campaign you believe in, and you will potentially get your money back, plus interest.
Why it’s important to sustainably invest
So, now you know how you can use the tenets of sustainable investing in small businesses in your community, why is it important to incorporate sustainability into your investment portfolio?
Well, your investment decision influences how companies interact with the world around them. If you see businesses that are doing things that you like, you should invest in them! If a company is doing things you don’t agree with, don’t! It’s a positive feedback loop that allows you to make an investment in businesses that align with your principles.
Therefore, you get to decide for yourself how you can use your money to make a greater impact on the world. While you certainly should give to charity and nonprofits you believe in, you can also use that money to do good and receive a return on it (which you can save, or reinvest into other sustainable businesses around you!)
Also, by investing in a sustainable small business in your neighborhood, you get the chance to tangibly see the impact that your investment is making in your community. While investing in clean energy is great and all, you don’t always see the wind turbines generating that energy.
However, you do see the compost buckets popping up around your neighborhood being picked up by the company you invested in, and perhaps that fills you with a sense of satisfaction in addition to the money in your pocket from the investment.
Sustainable investing isn’t just for institutional investors
Individuals like you can make a difference and earn a return in the process by investing in local small businesses! Take a look at some live Honeycomb campaigns and see if any align with your sustainable investing goals.