You can earn returns without giving up your values.
You want to invest in a way that generates returns while leaving you with a sense of purpose. In a market where billions of dollars are being directed toward sustainable directions, the question is not whether to invest with values, but how to do it correctly. In this article, I break down the complex into something simple, step by step, with practical tools, professional authenticity, and examples you can act on immediately. Can integrating ESG reduce risk without harming returns? How can you verify whether a fund is truly authentic and not just greenwashing? And what measurable steps can you take to ensure your investment achieves both financial and social–environmental objectives? Keep reading—I’m going to take you up the stairs, from the fundamentals to the top.
Table of Contents
- Why ESG and SDG matter for the private investor
- Performance evidence: Do responsible investments generate returns?
- How Value2 builds a portfolio that combines returns and impact
- Practical guide for the private investor – questions, metrics, and tools
- Challenges worth knowing (and how Value2 deals with them)
- How to be a profitable ESG–SDG investor – a practical step-by-step ladder
- Key insights
Why ESG and SDG Matter for the Private Investor
ESG gives you new lenses through which to evaluate a company—whether you are a private investor or managing family wealth. It reveals environmental risks such as emissions and damage to resources, social risks connected to employees and community relations, and governance issues that reduce the risk of reputational or legal harm. SDG places your investment within the framework of solving global challenges such as clean energy, clean water, health, and education. When a company generates revenue from sustainable products and services, it signals long-term growth potential.
The volume of investment managed according to sustainability principles reached approximately USD 30.3 trillion in 2022—demonstrating how capital is shifting toward businesses that consciously manage risk and respond to future needs. If you’d like to better understand the approach that combines impact and returns, see Value2’s article on impact and ESG, where you’ll see how measurement and transparency turn promises into action.
You don’t need to give up returns to gain meaning—but you do need a clear process, measurement, and transparency. Without these, the term “responsible investing” can easily become a marketing slogan.
Performance Evidence – Do Responsible Investments Generate Returns?
Many studies show that integrating ESG criteria sometimes improves the risk–reward profile. It’s not a magic trick that always guarantees higher performance, but companies that manage risks better tend to withstand market shocks, maintain fair access to resources, and attract employees and talent. What should matter to you in practice are three clear elements: a measurement framework, quality reporting, and long-term financial performance evaluation.
When these exist, your portfolio is more likely to be both stable and growth-oriented. For an overview of the tools that connect ESG to financial fundamentals, you can explore the Value2 homepage.
The practical outcome for you: reduced unexpected risks, exposure to new growth opportunities, and peace of mind knowing your investment meets the criteria you set.
How Value2 Builds a Portfolio that Combines Returns and Impact
Value2 formulates three golden principles: high-quality ESG screening, strict financial analysis, and clear impact measurement aligned with SDG goals. In practice, the process includes initial screening of companies with strong ESG scores and revenue from sustainable products and services, deep macro and micro analysis, and active construction of a balanced portfolio.
Highlighted products include the North America Impact Fund, Global Equity Fund, Israeli Impact Portfolio, and the Vegan Portfolio. Each product is designed to serve investors seeking both values and returns. When evaluating an investment firm, insist on detailed impact metrics and performance reports before entering—and ask for independent third-party verification where available. This is a golden rule you should not compromise on.
Practical Guide for the Private Investor – Questions, Metrics, and Tools
Before investing, pause and ask yourself: What is your objective? Are you seeking steady income, long-term capital growth, or measurable impact based on SDG indicators? When the goal is clear, every financial decision becomes easier. Here are practical steps to help you build a clear roadmap:
Due diligence:
Request the ESG scoring methodology, the list of reported KPIs, and the control processes. Ensure reporting is periodic, quantitative, and verified.
Impact metrics to track:
Revenue from sustainable goods & services, CO₂ emission reduction, improved access to essential services aligned with SDG targets. Choose KPIs that are measurable and comparable.
Portfolio-building tactics:
Use DCA (Dollar Cost Averaging) to reduce entry-timing risk, diversify across sectors and geographies, and include exposure to companies that are not dependent on fossil fuels.
Request external verification:
Ask for third-party review to validate impact claims—such as assurance reports or independent examiner findings.
A dynamic process:
Schedule periodic review meetings, update criteria as measurement practices evolve, and learn from the data.
Practical example:
If you allocate 20% of your portfolio to companies developing water-recycling technology, request metrics such as annual liters purified, energy savings rate, and revenue derived from these products. This will quickly show whether your investment delivers the promised return and impact.
Challenges Worth Knowing (and How Value2 Addresses Them)
The most notable threat is greenwashing—claiming environmental responsibility without supporting data. Funds may highlight one small area that doesn’t represent their overall operations. To protect your investment, demand detailed reports based on recognized frameworks, and independent verification when possible. Using frameworks like SASB or TCFD makes fund comparison easier.
Another challenge is data quality: vague or unreliable data compromises meaningful impact measurement.
Value2 addresses these by requiring transparency, using proven data-collection practices, and employing external review of impact metrics. As an investor, demand clear measurement and proof through multiple methods—not statements alone.
How to Be a Profitable ESG–SDG Investor – A Practical Step Ladder
Becoming a profitable investor with ESG values and SDG targets is a process of ascending clear stages. Each step builds on the previous one. You start at the foundation and climb, step by step.
Step 1: Establish your foundation and investment objective
Define whether your goal is steady income, capital growth, or achieving measurable impact within a defined timeframe. Clear priorities prevent mistakes like entering a thematic fund that doesn’t match your risk level.
Step 2: Build clear selection criteria
Define financial thresholds and ESG criteria. Set a minimum ESG score, require revenue from SDG-relevant sustainable products or services, and insist on reporting transparency.
Step 3: Conduct high-quality due diligence
Review financial statements, cash flow, competitive positioning, and ESG metrics. Request third-party verification of impact. Study the management team, qualifications, and compensation policy. Proper due diligence exposes hidden risks.
Step 4: Build a strategically structured and diversified portfolio
Use DCA, diversify across industries and regions, and include exposure to non-fossil-fuel companies. Maintain a defined percentage allocated to high-growth sustainable technologies.
Step 5: Ongoing measurement and reporting
Establish clear SDG-linked KPIs and generate periodic reporting. Ensure metrics are quantitative, verifiable, and benchmarked. Ongoing monitoring allows real-time adjustments.
Step 6: Risk management and continuous improvement
Use controls to prevent greenwashing, update criteria based on regulatory and technological developments, and rely on third-party service providers for verification. Responsible investing is an ongoing process, not a single event.
Step 7: Learn and refine the approach
Every investment is a lesson. Learn from the data, reports, and performance. Adjust and seize new opportunities in markets or industries aligned with SDG goals.
Example: an investor who allocated part of their portfolio to impact strategies found that after two years, these assets delivered stable returns and reduced overall volatility thanks to exposure to alternative technologies and clean natural resources.
Key Insights
- Set a clear investment objective before choosing a product or investment firm.
- Demand measurable transparency and recognized frameworks for evaluating ESG/SDG.
- Use tools like DCA and diversification to reduce risks and improve stability.
- Request third-party verification to avoid greenwashing.
- Responsible investing improves the risk–reward profile but requires process, continuity, and constant learning.
FAQ
Q: Do ESG investments always generate higher returns?
A: Not always. ESG does not guarantee higher returns automatically. What it can do is improve risk management and reduce exposure to regulatory or reputational failures. Combine financial analysis with ESG criteria to assess return potential. Long-term tracking is more important than short-term comparison.
Q: How can I avoid falling for greenwashing?
A: Request detailed reports with KPIs and measurement methodologies. Require recognized frameworks and third-party verification. If a fund emphasizes marketing claims without concrete data, it’s a red flag. Transparency and periodic reporting are key.
Q: Which SDG-related metrics should I track?
A: Metrics such as revenue from sustainable goods & services, greenhouse-gas emissions reduction, access to healthcare or education, and measurable improvements in social outcomes. Choose quantitative KPIs and ensure there is a data-collection and verification process.
Q: How important is geographic and sector diversification in an ESG portfolio?
A: Very important. Some risks are local or sector-specific. Diversification reduces local shocks and stabilizes the portfolio—while keeping alignment with your values and target sectors.
Q: Should I invest in thematic funds or a balanced equity portfolio?
A: It depends on your objectives. Thematic funds may offer targeted growth opportunities but are more volatile. A balanced portfolio provides more stability and combines both return and impact. Consider mixing approaches according to your risk tolerance.
Q: What is the first step I should take now?
A: Define your objective and timeframe. Gather reports from several funds or investment houses and examine their ESG metrics and KPIs. Consider meeting with a licensed advisor to tailor your strategy. If unsure about timing, begin with DCA.
About Value2
Value2 is Israel’s pioneering home for responsible investing. Established in early 2019, the company offers managed funds that invest in balanced portfolios of outstanding public companies characterized by high-level organizational conduct and risk management (ESG), while simultaneously addressing urgent global needs with high growth potential (SDG).
The result: a responsible-investing firm free of fossil fuels, with measurable impact, consistently outperforming standard benchmarks, and committed to strong financial returns.
Nothing herein constitutes a commitment to achieving returns or an indication of future results. This content does not constitute an offer to invest in partnerships or other financial products, nor does it constitute investment advice or marketing. Investments carry risks as detailed in the agreements and from exposure to securities.
What’s your next step?
Are you ready to redefine your investment objective, build clear ESG criteria, and evaluate a fund that reports its impact?
Would you like a meeting to create a personalized DCA plan that combines returns and meaning?
Are you ready to measure the impact of your investments over the next three months?
