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4 Steps to Building a Sustainable Portfolio

4 Steps to Building a Sustainable Portfolio

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 to explore our research, use our ESG screener to find investments that fit your needs, and more.

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About the Authors

Carole Hodorowicz

Audience Engagement Editor
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Carole Hodorowicz is a former audience engagement editor for Focusing on the individual investor audience, she managed content, created explainer videos, and wrote articles about different topics in finance for beginners.

Hodorowicz joined Morningstar in 2015 as a customer support representative for Morningstar Office before moving into an editorial role.

Hodorowicz holds a bachelor’s degree in journalism from Eastern Illinois University.

Katherine Lynch

Data Journalist II
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Katherine Lynch was a data journalist for Morningstar. She covers mutual fund and exchange-traded fund trends and creates educational content for new investors.

Lynch joined Morningstar in 2018 through the Morningstar Development Program for new graduates. She worked as a support representative for Morningstar Office and Direct clients.

Prior to joining Morningstar, Lynch studied economics and philosophy at Creighton University in Omaha, Nebraska.

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