In recent months I have been looking at all aspects of my life to assess where I can lighten my ecological footprint and, within my personal sphere of influence, positively encourage global warming mitigation action.
Naturally for someone interested in personal finance, the question arises whether there are ways to invest in companies that have more progressive stances on the environment and, likewise, avoid certain firms or industries which don’t.
One approach that is becoming increasingly popular is ESG investing. ESG refers to Environmental, Social and Governance, three key factors in measuring the sustainability and ethical impact of an investment in a particular company. The concept picks up environmental concerns (eg. climate change and sustainability), social concerns (eg. diversity, human rights, consumer protection and animal welfare) and corporate governance (eg. executive pay, employee relations and compensation). All good things in my mind, and aligned with my values.
Like anything though, it is important to look beyond the surface and unfortunately ESG doesn’t necessarily mean as green, sustainable or ethical as I assumed. Digging a little deeper has me questioning whether ESG funds are materially different from other investment options, especially within an index fund. At a more fundamental level, I’m also questioning whether attempting to invest in sustainable companies makes sense or if there better ways to allocate my money and time.
Maybe I’m getting old, but it feels like many things just aren’t built to last anymore. Planned obsolesence, which is a business strategy to have things fail and encourage consumers to replace them, seems to be real phenomenon. In addition, we have endless items available to us as consumers that are virtually disposable – super low cost, easily accessible and so cheap that you’re happy to buy without thinking, even if only to use once or twice. Sometimes I think things are just too affordable.
Even if something doesn’t break, we feel compelled to replace it in time anyway. Marketers employ sophisticated techniques to convince us that new is good and old is less desirable. “Keeping up with the Joneses” mentality is unfortunately common place and, as consumers, we are conditioned to buy, buy, buy.
What is the true cost of our hyper consumerist, disposable society?
I posted recently about reframing my pursuit of financial independence to capture a more holistic ambition to also lead a sustainable, balanced lifestyle – Financial Independence Live Lightly and Simply (FILLS). With that bit of context, I wanted to write a quick blog post given events this week at the United Nations.
Over the last 12 months I’ve been obsessed with the concept of financial independence (FI). Essentially FI allows you to design a life you want without taking money into consideration. For me, embedded in the goal of FI are concepts of freedom, self-reliance, optimism and the sense of endless future possibilities. At its essence, the path to FI is relatively simple – spend less, save more, and optimize the difference. I’ve realized though, it isn’t all about money.