Environmentally conscious investing: is it for you?

Jan 24, 2024

Financial planning

Environmentally friendly investing
Environmentally friendly investing

One thing we all love is having choices. From the clothes we decide to put on in the morning, to what we eat for lunch, our mode of transportation, to how we spend money–we tend to feel happier when we have a good balance of options and control in our decisions. 


Investing is no different. And fortunately, there are more ways to invest today than ever before. And as a generation growing up in the aftermath of climate change denial, more and more individuals are starting to look into environmentally conscious investing.


Come read along with us as we answer these questions:

  • What is environmentally conscious investing?

  • What are its benefits?

  • How has environmentally conscious investing performed?

  • How well do you know your investments?


What is environmentally conscious investing?


Environmentally conscious investing is a form of investing that’s focused not only on financial returns, but also on the impact companies have on the environment, society, and how they run their businesses.


Some examples of environmental factors that are taken into consideration include a company's carbon footprint, use of renewable energy, waste management practices, and overall commitment to sustainability.


Remember when Erin Brokovich took on PG&E for contaminating groundwater that caused widespread illness in Hinkley, California? That’s an example of a company that would score low.


What are the benefits of environmentally conscious investing?


There are several main benefits of environmentally conscious investing.

  1. Values-based: At its core, environmentally conscious investing is values-based. This means you can choose to invest–or not invest– in companies and industries that align on your values. It means you have more choices.

  2. Positioned for the future: Environmentally conscious investing is a way for people to invest in businesses that are well-positioned for future challenges such as limited natural resources, climate change, and changes in social expectations. That might even mean that they may grow and adapt faster, compared to companies that haven’t thought deeply about the future.

  3. Adaptable: Companies that have thorough environmental practices in place may be better prepared to handle new government regulations down the road and avoid penalties for non-compliance.


How has environmentally conscious investing performed?


Some people believe that choosing environmentally conscious investments always comes at a cost of lower returns. And while there are a number of folks who are okay with lower returns to help create a brighter future, recent years have seen strong performance of renewable energies, electric vehicle manufacturers, and other industries that fit within “environmentally conscious investing”. 


There are many environmentally focused funds that have had similar or even higher returns than traditional investment options. However, like all investments, returns are not guaranteed. 


Studies suggest that environmentally conscious companies may even outperform their counterparts over longer time periods. Here are some examples:


Morningstar: A study by Morningstar found that sustainable funds consistently outperformed traditional funds over various time frames. The study showed that, on average, sustainable funds outperformed their peers in 2020 and over the preceding three, five, and ten years.



MSCI Research: MSCI conducted a study that revealed companies with high environmental, social, and governance (ESG) ratings demonstrated lower volatility (prices didn’t go up and down as extremely/often) and higher profitability over time. This supports the idea that environmentally conscious investing can be resilient and profitable. (Historical performance results are presented for illustrative purposes only. Past performance is no guarantee of future results.)


Harvard Business Review: A Harvard research study found that companies with high ESG scores typically had lower costs of capital and higher valuation multiples. That simply means that companies–who are performing well from an environmental, social, and management point of view–tend to get easier access to money because more people think the company is valuable.


A list of sustainable equity index funds



How well do you know your investments?


What you may find interesting is that many people don’t fully realize what they’re invested in. For example, exchange traded funds (ETFs) and mutual funds are a popular way to invest because you can get exposure to a lot of companies all at once.


However, many of these funds have holdings that include companies in industries that are generally not perceived as environmentally friendly such as oil and gas, factory farming, or fast fashion (like Forever 21 or Shein) due to their negative impact on pollution. 


Similarly, some ETFs have exposure to payday lenders, for-profit prisons and “sin stocks”–companies that are involved with activities that have broader societal impacts such as tobacco, gambling, alcohol, weapons, and adult entertainment. 


For example, large ETFs like Vanguard’s VOO which follow the S&P 500 can have exposure to companies such as CZR, LVS, MGM, and WYNN which are in the Casinos & Gaming industry. 


Other well known ETFs like Vanguard Total Stock Market Index Fund and the iShares Russell 2000 ETF have both held payday lender World Acceptance Corporation (WRLD) and FirstCash Holdings, INc. (FCFS) (Source: Yahoo Finance, 2023).


Also, even if an ETF has a suggested theme, the holdings that make up the fund may be different than you’d expect. 


So if you want your money to be aligned with certain values, take some time to look under the hood. You might not have your money invested in companies that align with  how you live your life. 


How Plenty can help


There’s no right or wrong answer on how to invest. Maybe you’re OK with exposure to tobacco companies but can’t stand payday lenders. Or perhaps you don’t mind any of those.


We’re here to educate you and make it easy for you to reflect your values however you choose to invest. 


At Plenty, we allow for fine grained control (unlike ETFs/mutual funds) where we'll make sure you don't accidentally invest in things you don't believe in. 


How does that work? First, we combine independent reports from business analysts on the governance and environment practices of corporations. We then screen companies for level of involvement in values ie. manufacturing tobacco products, arms productions, etc. 


Companies that have engaged in any of these practices in the past 6 months, are excluded as options for your portfolio. Learn more about sustainable investing with Plenty in our help center.


Ready to get started? Sign up for an account with Plenty today.


– Team Plenty


This information is for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such. Before taking action based on any such information, we encourage you to consult with the appropriate professionals. We do not endorse any third parties referenced within the article. Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Past performance is no guarantee of future results. All investing involves risk and there is a possibility of loss, including loss of principal. Historical or hypothetical performance results are presented for illustrative purposes only. An investment in a fund entails a high degree of risk, including the risk of loss. There is no assurance that a Fund’s investment objective will be achieved or that investors will receive a return on their capital.  Environmental, social and governance (ESG) strategies are subject to inconsistent industry definitions and standards for the measurement and evaluation of ESG factors. As a result, it may be difficult to compare ESG investment products or offerings.  When pursuing ESG investing, securities may be included or excluded from a portfolio based on ESG factors rather than other investment methodologies. As a result, a portfolio's performance may differ (either higher or lower) from the overall market or comparable portfolios that do not involve ESG strategies. Environmental ("E") factors can include climate change, pollution, and waste. Social ("S") factors can include how an issuer manages its relationships with individuals, such as its employees, shareholders, and customers. Governance ("G") factors can include how an issuer operates, such as its leadership composition, pay and incentive structures, internal controls, and the rights of equity and debt holders. 



Plenty was founded to democratize access to financial products and tools that accelerate wealth building. Plenty Financial and affiliated entities. (“Plenty Financial”) provide a web, mobile, personal financial management and educational platform to consumers; some of these tools are freely accessible to all consumers, others require a fee-based subscription. Advisory services are provided in the form of software-first financial planning and investment advisory services for fee-based Subscribers. Plenty Financial RIA, LLC is an SEC-Registered Investment Advisor. All investments made are legally owned by you. Investing is inherently risky and Plenty does not guarantee positive performance. Investments are held in accounts at BNY Mellon | Pershings, the world's largest securities servicing company and are SIPC insured. Investing involves risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.


Brokerage services are provided by Atomic Brokerage LLC "Atomic Brokerage", member FINRA and SIPC. Clearing and custody services are provided by Brokerage firm BNY Mellon Pershing, member SIPC. Plenty Financial RIA, LLC has a relationship with Atomic Brokerage to manage and execute investments on behalf of customers. Subadvisory services are offered through Atomic Invest LLC ("Atomic Invest"), an SEC-registered investment advisor, member SIPC. Atomic Invest was formerly known as Helium Advisors LLC.


Return data used in the interactive tool are hypothetical performance data which contains inherent limitations and is not a substitute for actual investment returns derived from a live portfolio. There are numerous risk factors related to trading and markets which cannot be fully accounted for when depicting Hypothetical Performance. Consequently, future returns are not guaranteed, and a loss of principal may occur. THIS IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE. This site/application has been prepared by Plenty and is not intended to be (and may not be relied on in any manner as) legal, tax, investment, accounting or other advice or as an offer to sell or a solicitation of an offer to buy any securities of any investment product or any investment advisory service. The information contained in this site/application is superseded by, and is qualified in its entirety by, such offering materials. This site/application may contain proprietary, trade-secret, confidential and commercially sensitive information.


By accessing this site, you signify your agreement with and understanding of the following Terms of Use and Legal Information pertaining to both this site and any material in it. Plenty owns and maintains this site. No act of downloading or otherwise copying from this site will transfer title to any software or material at this site to you. Anything that you transmit to this site becomes the property of Plenty, may be used by Plenty for any lawful purpose, and is further subject to disclosure as deemed appropriate by Plenty, including to any legal or regulatory authority to which Plenty is subject. Plenty reserves all rights with respect to copyright ownership of all material at this site, and will enforce such rights to the full extent of the law.


Plenty was founded to democratize access to financial products and tools that accelerate wealth building. Plenty Financial and affiliated entities. (“Plenty Financial”) provide a web, mobile, personal financial management and educational platform to consumers; some of these tools are freely accessible to all consumers, others require a fee-based subscription. Advisory services are provided in the form of software-first financial planning and investment advisory services for fee-based Subscribers. Plenty Financial RIA, LLC is an SEC-Registered Investment Advisor. All investments made are legally owned by you. Investing is inherently risky and Plenty does not guarantee positive performance. Investments are held in accounts at BNY Mellon | Pershings, the world's largest securities servicing company and are SIPC insured. Investing involves risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.


Brokerage services are provided by Atomic Brokerage LLC "Atomic Brokerage", member FINRA and SIPC. Clearing and custody services are provided by Brokerage firm BNY Mellon Pershing, member SIPC. Plenty Financial RIA, LLC has a relationship with Atomic Brokerage to manage and execute investments on behalf of customers. Subadvisory services are offered through Atomic Invest LLC ("Atomic Invest"), an SEC-registered investment advisor, member SIPC. Atomic Invest was formerly known as Helium Advisors LLC.


Return data used in the interactive tool are hypothetical performance data which contains inherent limitations and is not a substitute for actual investment returns derived from a live portfolio. There are numerous risk factors related to trading and markets which cannot be fully accounted for when depicting Hypothetical Performance. Consequently, future returns are not guaranteed, and a loss of principal may occur. THIS IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE. This site/application has been prepared by Plenty and is not intended to be (and may not be relied on in any manner as) legal, tax, investment, accounting or other advice or as an offer to sell or a solicitation of an offer to buy any securities of any investment product or any investment advisory service. The information contained in this site/application is superseded by, and is qualified in its entirety by, such offering materials. This site/application may contain proprietary, trade-secret, confidential and commercially sensitive information.


By accessing this site, you signify your agreement with and understanding of the following Terms of Use and Legal Information pertaining to both this site and any material in it. Plenty owns and maintains this site. No act of downloading or otherwise copying from this site will transfer title to any software or material at this site to you. Anything that you transmit to this site becomes the property of Plenty, may be used by Plenty for any lawful purpose, and is further subject to disclosure as deemed appropriate by Plenty, including to any legal or regulatory authority to which Plenty is subject. Plenty reserves all rights with respect to copyright ownership of all material at this site, and will enforce such rights to the full extent of the law.


Plenty was founded to democratize access to financial products and tools that accelerate wealth building. Plenty Financial and affiliated entities. (“Plenty Financial”) provide a web, mobile, personal financial management and educational platform to consumers; some of these tools are freely accessible to all consumers, others require a fee-based subscription. Advisory services are provided in the form of software-first financial planning and investment advisory services for fee-based Subscribers. Plenty Financial RIA, LLC is an SEC-Registered Investment Advisor. All investments made are legally owned by you. Investing is inherently risky and Plenty does not guarantee positive performance. Investments are held in accounts at BNY Mellon | Pershings, the world's largest securities servicing company and are SIPC insured. Investing involves risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.


Brokerage services are provided by Atomic Brokerage LLC "Atomic Brokerage", member FINRA and SIPC. Clearing and custody services are provided by Brokerage firm BNY Mellon Pershing, member SIPC. Plenty Financial RIA, LLC has a relationship with Atomic Brokerage to manage and execute investments on behalf of customers. Subadvisory services are offered through Atomic Invest LLC ("Atomic Invest"), an SEC-registered investment advisor, member SIPC. Atomic Invest was formerly known as Helium Advisors LLC.


Return data used in the interactive tool are hypothetical performance data which contains inherent limitations and is not a substitute for actual investment returns derived from a live portfolio. There are numerous risk factors related to trading and markets which cannot be fully accounted for when depicting Hypothetical Performance. Consequently, future returns are not guaranteed, and a loss of principal may occur. THIS IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE. This site/application has been prepared by Plenty and is not intended to be (and may not be relied on in any manner as) legal, tax, investment, accounting or other advice or as an offer to sell or a solicitation of an offer to buy any securities of any investment product or any investment advisory service. The information contained in this site/application is superseded by, and is qualified in its entirety by, such offering materials. This site/application may contain proprietary, trade-secret, confidential and commercially sensitive information.


By accessing this site, you signify your agreement with and understanding of the following Terms of Use and Legal Information pertaining to both this site and any material in it. Plenty owns and maintains this site. No act of downloading or otherwise copying from this site will transfer title to any software or material at this site to you. Anything that you transmit to this site becomes the property of Plenty, may be used by Plenty for any lawful purpose, and is further subject to disclosure as deemed appropriate by Plenty, including to any legal or regulatory authority to which Plenty is subject. Plenty reserves all rights with respect to copyright ownership of all material at this site, and will enforce such rights to the full extent of the law.