What is a Sustainable Roth IRA?
Finding a sustainable Roth IRA is an investment strategy that seeks to maximize financial return while simultaneously advancing an idea, belief or cause that is important to the individual investor, through the use of ESG. ESG stands for Environmental, Social and is the criteria that is used to screen sustainable investments that can be used in a Roth IRA.
What is a Roth IRA?

A Roth IRA, or a Roth individual retirement account, is a type of investment account that permits tax-free withdrawals so long as certain criteria are met. Funds can be added to these accounts post-tax, thus the contributions are not tax-deductible. However, this also means that withdrawals are tax-free. The benefit of a Roth IRA, in particular, is that it can aid your financial situation should your marginal taxes be higher in retirement than they are prior to that time.
There are some limitations to a Roth IRA. Namely, filers can only contribute if their annual income is below a certain amount. As of 2022, this amount is $144,000 for single filers and $214,000 for married couples filing jointly. The current contribution limit is $6,000 before retirement and $7,000 post-retirement. Yet, as individuals investigate the benefits of a Roth IRA, they may question where their money is going. Therefore, many have turned to SRI.
What is SRI?
In any case, an individual’s retirement funds are being invested in a variety of companies. So, many believe that the companies they fund should have values and ideals matching their own. This is the basis of SRI. SRI is socially responsible investing. SRI has become more and more popular, with reports showing that SRI assets have increased approximately 40% year-over-year since 2016.
Depending on the investor’s profile, this could look drastically different from one person to the next. For one individual, this could be represented in the avoidance of funding gun manufacturers. Another may have a strong preference for supporting companies that in turn support LGBTQIA+ rights. And a third may want to ensure their money is funding companies that align with their religious beliefs.
Socially Responsible Investing and ESG
One newer method of approaching socially responsible investing for investment firms by creating teams to investigate ESG standards. ESG stands for environment, social, and governance. The benefit of ESG standards is that they help to standardize the evaluation of a company’s impact with a more objective view than other SRI methods. This criteria rates a company’s social impact by evaluating the following:
Environmental Impact

What is the company’s carbon footprint? Are they associated with the fossil fuel industry? Do they utilize toxic chemicals in manufacturing? How much waste do they produce? There are plenty of questions to consider when evaluating how a company interacts with our environment.
Social Impact
This criterion evaluates impact both within the company. However, it also acknowledges how the company interacts with the broader community. This can include everything from hiring practices to inclusion programs. Does the staffing show diversity in gender, race, and LGBTQIA+ identities? Is this diversity shown in both overall staffing and the executive suite?
And looking on a more macular level, does the company have a corporate responsibility team to evaluate their social impact? How does the company advocate for societal change? Social impact can be one of the hardest to evaluate because different individuals are bound to have varying opinions on what positive social change looks like.
Governance
Similar to social impact, governance evaluates how a company’s board of directors or upper management pushes for positive change. This can include how leadership responds to criticism from the public and internal stakeholders. It can include pay equity as well. Governance includes anything that shows how those in positions of power relate to their staff and their shareholders.
ESG Scores
Environmental, social, and governance scores are typically rated on a 100-point scale, with 100 being an ideal rating. However, this score may vary depending on the evaluating organization. Different investment firms tend to analyze companies using distinct metrics and algorithms. This tends to be the largest concern when it comes to ESG. It is important to find an investment firm you trust to evaluate where you invest your funds.
Ethical Investing Companies

Why do we need ethical investing companies? Well, it can be difficult to understand the complexities of the financial world. It takes time to develop the knowledge of a company’s impact, making socially responsible investing potentially daunting for those with a busy lifestyle. Many investment firms have thought about this burden on their clients and acted to ease this stress.
Companies like EGÉA SRI have chartered SRI counselors with foundational knowledge of the history, definitions, trends, portfolio construction principles, fiduciary responsibilities, and best practices for socially responsible investments. In doing so, investment firms can be seen as ethical investing companies. They do not just care about the money you invest. Rather, ethical investing companies seek to understand the values of their clients and serve them to the best of their ability.
Balancing Your IRA
In order to responsibly balance your IRA, you have to look at both the financial and social impact of investing. But as noted above, you do not have to do this alone. When evaluating an investment firm to choose for your Roth IRA, make sure you read about the values of the establishment. Then, let them help take the burden off of your shoulders. Many firms have ETF screeners or SRI counselors to help investors find and compare SRI funds.
If you are looking to find the best sustainable Roth IRA, you can request a free consultation with EGÉA SRI. Once you’ve signed up for a consultation, a member of their team will be in touch to collect more information and walk you through the next steps. Your consultant will listen diligently to your investing goals, preferences, and values and they will aid you in your mission to invest more responsibly! Their Chartered SRI Counselors™ will help you make a positive difference.
Disclosure:
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.