Skip to Content
US Videos

4 Steps to Building a Sustainable Portfolio

Here’s how to build a portfolio that fits your sustainability goals and interests, like climate change.

Katherine Lynch: As investors, it's important to know how the investments in our portfolios make an impact. One way to look at this is through the lens of climate change.

Carole Hodorowicz: Climate change has become one of the biggest systemic risks to the financial markets for investors. In 2021, the level of emissions, like carbon, have reached record highs. These emissions are causing global warming. 

Lynch: Many investors choose to build sustainable portfolios, or invest in companies that are helping solve environmental and social challenges. Building a sustainable portfolio can be overwhelming at first. Here are four steps investors can follow so they can make real changes with their portfolios. 

Hodorowicz: Step 1: Discover what sustainable investing means to you. What sustainable goals do you have? 

Lynch: Step 2: Understand what’s already in your portfolio. If you want to monitor your climate impact, you might want to ask yourself: Do the funds I invest in have holdings that ally with my desire to reduce carbon emissions? 

Hodorowicz: Step 3: Know what sustainable options are available to you. For example, if you’re looking for a hands-off approach, consider a passive sustainable fund.

Lynch: Step 4: Make a plan for transitioning your portfolio. There are several factors to keep in mind, such as your overall risk and return objectives and tax implications. Most investors benefit from taking a gradual approach. 

Hodorowicz: Still don’t know where to start? Go to Morningstar.com to explore our research, use our ESG screener to find investments that fit your needs, and more