This is an article I just wrote for Whole Person Calendar.
"Sustainable And Responsible Investing: How Your Money Can Help You and The World"
You can view the article PDF
here.
In the past few years, our financial system has been rocked to its core. Belief in profit-driven motives as the sole metrics of perfor-mance has been fundamentally shaken. Our perception of risk have been forever altered, and our economy is shifting toward a new foundation. Traditionally, investments are made with one, and only one, measure in mind -- how much money does the invest-ment return? Every investment is consid-ered for its financial return potential, yet fi-nancial return should not be the only metric for success. In today’s world, investing pro-cesses must take into consideration the im-pact on the environment, the individuals employed, the communities involved, the climate, biodiversity issues, and a host of other factors.
One of my clients, Terrie, is an anti-tobacco educator for colleges across California. She’s devoted to her job and has a talent for helping young people recognize the perils of smoking. That’s why she was appalled when she learned that every one of her mutual funds held large investments in tobacco stocks. For Terrie, the revelation that her investment portfolio conflicted with her personal values is what sent her to my office and marked the beginning of her interest and inquiry in socially and environmentally responsible investing. Another client of mine, Mary, is pleased that now her “mon-ey is where her mouth is.” Mary, a successful television actress, is very active in supporting environmental groups and progressive causes. For years, her advisor was a family stockbroker at a major brokerage firm. On a number of occasions, she raised her concerns about companies in her portfolio that depleted natural resources and befouled the earth. Mary encouraged her advisor to find investments and mutual funds that were socially and environmentally responsible. Throughout the relationship, the broker derided her concerns; he dismissed such requests and advised her that sustainable and respon-sible investment strategies were inferior. Eventually Mary got fed up. She came to me seeking someone who would not only listen to her concerns, but also help her to earn competitive returns on her portfolio. Mary says she is pleased that her wealth is not only growing, but it is also helping to fuel positive change in the in corporate America and having an impact through community development investments she has made. Her investments, she says, are now safeguarding her family’s welfare – and the planet’s.
Mary and Terrie aren’t alone. The trend toward sustainable investing, also known as socially responsible investing (SRI), began in the 1960s, as people began to shun companies like Dow Chemical that profited from the manufacture of napalm for the Vietnam War. The movement to sell off “sin stocks” gained momentum in the 1980s. A growing number of investors found it unconsciona-ble to hold stocks in companies that did business in apartheid South Africa. Success with helping to end apartheid inspired socially responsible investors to turn their attention to other issues, such as protecting the environment and promoting fair labor practices. One faith-based institutional investor on the East coast, alone, leverages its $90 billion in assets to make better corporate citizens out of companies as large and powerful as Exxon Mobil, Chevron and General Electric.
Today, one out of every eight dollars under professional management in the U.S. is part of a values-based portfolio. In 2007, the Social Investment Forum reported that socially responsible invest-ments in the U.S. totaled more than $2.71 trillion in total assets under management using one or more of the three core socially responsible investing strategies—screening, shareholder advocacy, and community investing. About one out of every ten dollars under professional management in the United States today is involved in socially responsible investing—11 percent of the $25.1 trillion in total assets under management.
How Can I Become A Socially Responsible Investor
