Can investing with a conscience play a role in mental wellbeing?

I talk a lot about how nutrition and a healthy lifestyle can benefit mental wellness, but this year’s Earth Day theme is “Invest in our planet” and so I thought that talking about how investing with a conscience and financial health can influence mental wellbeing.

After spending a long career in financial services, I am a huge advocate of SRI (socially responsible investing), ESG (refers to environmental, social and governance factor), and impact investing. As a result, I share my passion with this topic, but not my bias. There is no single way to invest with a conscience that is better than another. It comes down to how well you sleep at night knowing where your dollars are put to work.

Here comes the disclaimer: I need to be very clear, I’m not proclaiming any financial advice in this post or any associated social media. I’m NOT in a position to provide you with ANY financial advice. But I can share some information here today on health and how financial health plays a role. If you’re interested in working with a Canadian financial advisor that cares about the planet and life on earth, I would be happy to recommend a licensed financial advisor that can help you. You can contact me for a referral, which I would be more than happy to share with you.

Investing with a clear conscience may actually relieve some stress, if you’re feeling weighed down with climate change, the health of our planet and the future of earth.

Let’s have a look at some of the key ways you can invest for the sake of the planet (and your own wallet).

Socially Responsible /Investing Investments (SRI)

SRI actively avoids certain investments based on ethical guidelines. Screening to remove investments, known as negative screening, is the primary way that SRI operates. However, some portfolio managers also incorporate positive screening and look for “good” companies to include in a mutual fund, ETF, or portfolio. Because SRI takes an active approach, this can also include monitoring the holdings and engaging with said companies. For example, if a company were to meet the balance sheet requirements but suddenly fall short with a scandal in supply chain issues, or gender equality in the boardroom, a portfolio manager may raise this issue with the company, representing you as the investor. They may also choose to divest. Common negative screens include: alcohol, tobacco, pornography, gambling, weapons, human rights, environmental damage. Ultimately, a manager would ensure growth (or income, or both) are the focus of the investment - so profits are still a viable reward with your investment.

ESG 

ESG represents the environmental, social, and governance practices of a particular company that would have any influence on its performance as an investment. Generally speaking, money managers would consider ESG factors as risks or benefits in a more traditional financial analysis. They deem these conditions to affect the financial performance of a holding as they would the management of the company, its profitability, future prospects. Some examples of ESG factors include: pollution, human rights, climate change, animal welfare, employee safety, transparency & disclosure, executive compensation and community engagement. Even more recently, mental health in the workplace is being considered an ESG factor. Workplace wellness programs and resources are key to retaining wonderful, healthy employees.

Ultimately, ESG is one of many factors and managers still focus on investment performance above all else, keeping in mind the mandate’s goal(s) to generate growth, income, or both.

Impact Investing

Impact investing is a little bit different from the last two. A business that has set out specific goals to make a positive impact in some way would fall into this category. Take for example, electric vehicles, sustainable agriculture, or renewable energy. The goal of companies producing products or services in these categories would be making an impact and a profit.

These investment approaches are not exclusive of each other and can certainly be pieced together in a portfolio. They all have their own pros and cons and your personal risk tolerance should be considered in any form of investment. There’s so much more I could discuss about them, but let’s allow the experts to take that podium: RIA CANADA

Now let’s get to the current state of mental health in Canada.

CPI inflation measures price movements, obtained by comparing the retail prices of a representative "shopping basket" of goods and services at two different points in time. To learn more about CPI inflation and the Consumer Price Index (CPI), visit the Bank of Canada’s website.

Financial health influences mental health

Financial health plays an important role in mental and physical health. If you’ve ever had either an influx or an outflow of dollars suddenly, you understand the stress that this can cause. I always equate planning out someone’s personal health journey to this. If it’s completely acceptable to have a financial plan, why isn’t a health plan equally as important? To me, that financial plan should be inside of an overall health strategy.

Stress from financial woes can disrupt your sleep, make you feel anxious, depressed and worthless. These mental health symptoms may also disrupt physical health, as well: headaches, aches and pains, digestive troubles, and changes in blood pressure or triglyceride levels. 

For the first time in a Millennial’s lifetime, they are experiencing above-target inflation as adults. And for some of us Gen X-er’s, this is our first time too as we face the grown-up responsibilities of rising gas, grocery, clothing, and utility costs. Remember your parent’s complaining about their mortgage payments, the price of gas, etc. in the 80’s?

But, aside from just the financial stress we are experiencing, we are also experiencing a mental health crisis during the COVID pandemic. Let’s toss in climate change, isolation, health worries along with any pre-existing conditions and stressors. Inflation will only confound the current mental health crisis we are seeing.

In fact, one in every two Canadian adults, 40 and over have had or currently have a mental illness. 

Source: CAMH.

According to Mental Health Research Canada, a poll conducted with adults over 18 said they experienced high anxiety levels and depression at a much higher incidence since the pandemic. Just under a year later, this same poll revealed more even dramatic results.

So, can investing with a conscience influence mental health?

What if your investments were doing good for both you and the planet? Maybe it’s just a small part of your portfolio at first. Then it’s your entire investment holdings. It can be your bank account, your mortgage, life insurance and more. Think of your dollars put to work for you with an earth-first approach.

Ask yourself, would you sleep better at night knowing that you are investing in renewable energy, sustainable agriculture, plant-based food holdings, companies that invest in an inclusive culture, that have an ethical supply chain, and invest in ethical practices? Then you likely have you answer.

But, if you’re not sold, what’s holding you back? Do you consider profitable oil companies that soil the earth with their detrimental pollution, killing animals and people to be a better choice? Even though tax dollars fund these corporations from time-to-time when their industry gets disrupted. Or are you worried about sacrificing returns? I encourage you to speak with a financial advisor that can explain any risks you’d be undertaking. Sacrificing returns is likely not one you’d have to consider - it is 2022, after all. I’ll leave you with that to muddle over.

Let’s also consider that mental well-being of employees in investable companies is also becoming a more common ESG consideration. So, if workplace wellness is ESG, knowing that you are contributing to wellness in the workplace for employees should be top of mind when building out your portfolio.

There is one caveat, you can’t go at this alone. You need the advice of a professional in your financial future. As I provide my clients with a health, wellness and nutrition plan for their wellness future, having a financial advisor help you with your investment pathway is monumental. Investing with a clear conscience may be an important part of your health plan, and if so, you’re also investing in OUR planet. Thank you for that.

I truly want the best for you and your health and that means EVERY aspect of it. Sometimes, I need to call in other experts to help my clients and financial planning is just one of these tools. Building out a plan sounds easier than it is. I would love to help you build out your wellness plan and if you’d like to chat, click the button below to book your free discovery call. Let’s see if we’re a fit and how I can help you get your health path started.

And if you’re not already on my mailing list, sign up now and don’t miss a beat!

Sources:

Author, I. (2021, March 24). Data shows strong link between financial wellness and mental health. Enrich.Org. https://www.enrich.org/blog/data-shows-strong-link-between-financial-wellness-and-mental-health

Consumer price index, 2000 to present. (n.d.). Bankofcanada.Ca. Retrieved April 22, 2022, from https://www.bankofcanada.ca/rates/price-indexes/cpi/

COVID-19 data portal —. (n.d.). Mental Health Research Canada. Retrieved April 22, 2022, from https://www.mhrc.ca/covid-data-portal

Inflation: Definitions, graphs and data. (n.d.). Bankofcanada.Ca. Retrieved April 22, 2022, from https://www.bankofcanada.ca/rates/indicators/capacity-and-inflation-pressures/inflation/

Mental illness and addiction: Facts and statistics. (n.d.). CAMH. Retrieved April 22, 2022, from https://www.camh.ca/en/driving-change/the-crisis-is-real/mental-health-statistics

Zhou, M. (2021, September 21). ESG, SRI, and impact investing: What’s the difference? Investopedia. https://www.investopedia.com/financial-advisor/esg-sri-impact-investing-explaining-difference-clients/