For many investors, the traditional goal of maximizing returns is no longer enough. There’s a growing desire to ensure that their investments reflect their personal values. Enter values-based investing. This approach allows individuals to align their financial choices with what they believe in.
What is Values-Based Investing?
Values-based investing (VBI) is the practice of choosing investments based not only on financial potential but also on whether a company’s practices and mission align with the investor’s core beliefs. This could include environmental sustainability, ethical labor practices, or corporate integrity.
Incorporating a social objective or other nonfinancial objective into investment decisions will result in investment recommendations that are not focused on maximizing a financial return.
Biblical Foundations for Values-Based Investing
For Christian investors, values-based investing takes on a deeply spiritual dimension. Scriptures like Matthew 6:21 emphasize stewardship, integrity, and aligning our treasures with our hearts. Investing becomes an extension of faith in action.
How VBI Works in Practice Values-based portfolios often use filters or screens to include or exclude specific companies or industries. These screens can cover:
- Environmental responsibility
- Social impact
- Corporate governance
- Exclusion of companies involved in alcohol, tobacco, pornography, or abortion
Financial Returns and Moral Conviction
Investors may believe that aligning investments with values means sacrificing returns. But the evidence suggests a different story. Studies by Harvard Business School and Morgan Stanley have shown that values-based or sustainable portfolios may perform just as well—if not better—than traditional portfolios.
This does not mean that values-based investments will bring any positive performance as all investing is inherently risky, and past performance does not guarantee future results. This information is being provided to illustrate that sustainable fund investments may be a comparable alternative to traditional investment portfolios.
https://www.morganstanley.com/ideas/sustainable-funds-performance-first-half-2024
https://www.hks.harvard.edu/centers/mrcbg/programs/growthpolicy/does-sustainable-investing-lead-lower-returns
Building a Values-Based Portfolio
Getting started involves:
- Defining your core values
- Working with a financial advisor who understands values-based investing
- Choosing funds that reflect your beliefs
- Monitoring and adjusting your portfolio as needed
The Emotional Benefit of VBI Beyond the numbers, values-based investing offers peace of mind. There’s something powerful about knowing that your money is working for good in the world—that your investments have the potential not just to grow, but to grow with purpose.
Conclusion
Values-based investing is more than a trend. It’s a movement toward intentional living, faithful stewardship, and impactful decision-making. By aligning your investments with your beliefs, you’re creating a legacy that reflects not just your wealth, but your heart.
Put your treasure where your heart is.