Your financial goals—whether short-term or long-term—are within reach. Investing can help you pursue those goals, but returns are only one part of the picture. Many investors also want to understand how their investment choices reflect their personal values.

The companies you invest in influence the world through their products, services, labor practices, and environmental impact. As a shareholder, you support those activities. For some investors, that connection matters just as much as performance.

What Is Values-Based Investing?

Values-based investing focuses on aligning your investment strategy with your personal, social, ethical, or environmental priorities. When companies issue stock, they raise capital to fund operations, expansion, and innovation. By investing in those companies, you help fuel their business activities.

Values-based investors intentionally consider how companies operate, not just how they perform financially. This approach may include avoiding certain industries, prioritizing companies with responsible business practices, or investing in funds designed around specific social or environmental goals.

Why Many Investors Don’t Realize Where Their Money Goes

Even investors who care deeply about social and environmental issues may unknowingly hold investments that conflict with their values. This disconnect often happens for a few reasons:

• Limited visibility: Many people don’t regularly review the underlying holdings in their funds.
• Complex investment structures: Mutual funds and ETFs can hold hundreds of companies, making it difficult to understand full exposure.
• Assumptions about neutrality: Some investors believe financial decisions should remain separate from personal beliefs.
• Default investment choices: Workplace retirement plans often funnel contributions into preselected funds without much customization.

Without intentional review, portfolios can drift far from an investor’s principles.

Why Alignment Matters

Choosing whether to align investments with values is a personal decision, but awareness matters. When you invest in a company, you become a partial owner. That ownership supports the company’s direction, leadership, and business practices.

It can be helpful to ask yourself:

• Am I comfortable owning a stake in this company?
• Do its business practices align with my social, ethical, or environmental priorities?
• Would I support this company outside of my investment portfolio?

These questions don’t require perfect answers, but they encourage clarity.

Investing as a Reflection of Your Priorities

Investment decisions can serve as an extension of your values. For example:

• Investors who oppose certain industries may choose to limit exposure to tobacco, gambling, or fossil fuels.
• Those who prioritize sustainability may seek companies focused on renewable energy or resource efficiency.
• Investors who value diversity and inclusion may look for companies with transparent leadership and workforce practices.

Values-based investing does not require rigid rules. Many investors take a flexible approach, focusing on areas that matter most to them.

Sustainable, Responsible, and ESG Investing Explained

Values-based investing often overlaps with strategies labeled as:

• Socially Responsible Investing (SRI): Avoids or screens out companies that conflict with specific values.
• Environmental, Social, and Governance (ESG) investing: Evaluates companies based on sustainability, social impact, and corporate governance factors.
• Impact investing: Targets measurable social or environmental outcomes alongside financial returns.

These approaches continue to evolve, offering investors more options than ever to express their priorities through their portfolios.

How Values-Based Investing Can Affect Performance

A common concern is whether aligning investments with values limits returns. The answer depends on the strategy, the assets selected, and market conditions.

Some values-focused funds have performed competitively with traditional investments, while others may experience periods of underperformance. Companies with strong governance, risk management, and long-term sustainability practices can demonstrate resilience over time, but no investment approach eliminates risk.

The key is to evaluate values-based investments using the same discipline applied to any financial decision: diversification, cost awareness, risk tolerance, and long-term alignment with goals.

Finding the Right Balance

Values-based investing does not require choosing between principles and performance. Many investors aim for balance—aligning their portfolios with core beliefs while maintaining diversification and financial flexibility.

In some cases, trade-offs may arise. When they do, clarity around priorities helps guide decisions. With thoughtful planning, investors can often integrate values into their portfolios without sacrificing long-term objectives.

Bringing Values Into Your Financial Plan

Values-based investing works best when it fits into a broader financial strategy. Reviewing your goals, risk tolerance, time horizon, and tax considerations helps ensure your portfolio supports both what you value and where you’re headed.

At Navalign Wealth Partners, we are here to help investors like you align their portfolios with both their values and their financial goals. If you’d like to explore how values-based investing fits into your broader plan, contact us to start the conversation.