How to be financially ethical even when things are tight – Morningstar

By Hal M. Bundrick
You don’t have to be rich to exert your influence on the things that matter to you
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If you feel your values are being minimized in a world where only the loudest voices are heard, you can do something about it.
Even when money is tight, you can direct your financial resources in ways that support the causes you care about. And there are ways to exert your influence on matters important to you without spending a dime.
Here’s how to explore ethical finance.
What are socially conscious actions?
The steps you take to support causes based on your values — such as human rights, the environment, helping animals — are called socially conscious actions. They can include:
What is socially conscious consumption?
In short, it’s choosing to spend your money in a manner that supports your values. Every dollar builds momentum through increased demand, so that companies acting responsibly get the message: This is what people want.
Maybe it’s recyclable packaging, locally grown food, ethically produced goods or animal-cruelty-free products. According to a report commissioned by the World Wide Fund for Nature, "Consumers are changing their behavior, with [Google] searches for sustainable goods increasing globally by 71%" between 2016 and 2020.
"The connection between sweatshops and fast fashion is a good example," says Patricia Illingworth, a professor at Northeastern University and author of "Giving Now: Accelerating Human Rights for All." Many producers of inexpensive clothing are notorious for meager pay and dangerous working conditions, she says. "We don’t need 10 shirts, and we could buy brands that are transparent and ethical."
You might like:5 ways to support black-owned businesses
See if a company has been certified by B Lab, a nonprofit organization that measures the environmental and social justice performance and impact of for-profit businesses. You can check the B Corporation certification directory to see if a company you’re considering doing business with has met the B Corp. standards of socially conscious impact.
See: What California’s ban on gas cars could mean for you–even if you don’t live there
How to be socially conscious without spending a dime
One word: Volunteer. And it doesn’t have to be a solo effort. Networks of volunteers, called "mutual aid associations," often provide child care, grocery or medicine deliveries and other services to those in need or without transportation.
Some volunteer organizations cook, serve or deliver meals to fellow community members.
The power of socially conscious volunteer groups is that "people decide together what they want to do and how they want to help. And then they’re helping each other. And the people they’re helping may help other people at some point," Illingworth says.
Many times, these efforts offer an opportunity for volunteers to do things they love, such as cooking, sewing — or perhaps a little extra data crunching.
"A recent student in my philanthropy and ethics course set aside 30 minutes a day to help others," Illingworth says. Then, he and another student volunteer co-founded a nonprofit called Donor Lab, which uses data science to help nonprofits reach donors.
"They wanted to use their skills to help make the world a better place."
Don’t miss: Yoga enthusiasts in a twist over Lululemon’s links to polluting coal-powered factories
Socially conscious financial decisions, including charitable giving
Even considering such philanthropic powerhouses as the Gates, Ford and Getty foundations, individuals still account for more than two-thirds of all U.S. charitable contributions, according to a National Philanthropic Trust analysis of the 2021 Giving USA annual report. However, if your budget doesn’t have much "give" in it, you can still use the power of your everyday dollars to nudge change. Here are a few ideas:
Target your impact
Budget carefully to see how much you can possibly spare, then pick one area of impact and focus on that. Your dollars may go further with a small, hometown charity. However, you can also choose a national nonprofit known for efficient spending by checking its advisory score on Charity Navigator. Consider also combining and multiplying your contribution with other small donors by hosting a fundraising effort — perhaps something like a neighborhood yard sale with proceeds benefiting a worthy cause.
Check with your employer to see if it will match some or all of your nonprofit donation. Some companies do.
Be aware of — and reduce — your carbon footprint
That can include biking more, driving and flying less. Perhaps considering a hybrid or electric vehicle. And choosing LEED-certified lodging when traveling.
Examine your bank
Being open to changing your financial provider can allow you to find local options that may better suit your values. Community banks and local credit unions can be excellent options and may be easier to research than massive national financial institutions. Often such homegrown money centers are involved in local charities, social causes and benevolent projects worthy of your support.
And board members are often high-profile business leaders you may have heard of — or even know.
Here’s how to identify an ethical, socially responsible bank.
In your search, be aware of a marketing tactic called "greenwashing." That’s when businesses exaggerate their environmental priorities to gain favor with socially conscious consumers.
Check out:Plastic waste is such a big issue, Estée Lauder is looking to space for help
Consider targeted investing
Choices include donor-advised funds, or you might want to pick environmental, social and governance, or ESG, investments.
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Hal M. Bundrick, CFP(R) writes for NerdWallet. Email: [email protected] Twitter: @halmbundrick.

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