Last month we explored ideas, methods and philosophies around ethical consuming, an important idea that can transform how we view our own participation in oppressive and unjust systems. As more of us band together and make different choices, it is an idea whose execution can impact the world.
But today I want to talk about another way our money can be used for good or ill once it leaves our hands. Our investments …
[Photo credit:Got Credit]
I am not, shall we say, advanced in terms of economic thinking, and so this blog will in no way attempt to break down the financial side of investments or the economic implications thereof. But I did do a fair amount of research into the field of Socially Responsible Investing (SRI) and was encouraged by what I encountered.
Investing, for people without a full time adviser or a million dollar portfolio, generally involves checking a box at work and sending money into a 401K, an IRA or similar vehicle for retirement. Most of us have no idea what companies our money is invested in and therefore no idea of its impact on the world. And really, we may not have the option of control depending on how our investments are set up. But sometimes we do, and if you have a choice I would encourage you to consider SRI. It is a growing industry with plenty of options.
Socially Responsible Investing is a way to divert our investment dollars away from companies that do harm. This is what happened during the 1990s when people and companies wanted to protest apartheid in South Africa. An anti-apartheid movement that involved organized lobbying of individual companies and institutional investors to end their involvement with the apartheid state as a matter of corporate social responsibility is often credited as a major catalyst for change in the anti-apartheid movement. SRI is also a means by which we can direct our funds toward companies that do good—companies whose values and practices align with our own.
Read here and here to get a basic understanding of what socially responsible investing is. And here to read how it can actually be not only good for the world and our conscience but also how it has been a consistently good financial choice as well.
If you buy individual stocks (first of all I’m impressed with you and feel like you have some sort of super power I can never obtain) SRI is easier to do than if you invest in mutual funds where companies are grouped together for you. However, there are specific SRI funds that can do some of the work for you (see below). They vet the investments based on ethical guidelines that are made clear to you up front. And my limited research and some discussions I have had with those more knowledgeable than myself lead me to believe that while these funds do not perform as well as those in that are not socially responsible, they are not as far behind financially as you might think. Some offer returns close to those of the less ethical options.
Moving on to specifics – I researched four different funds, but I know that there are plenty more. In fact one study predicts that over the next few years SRI will go from being “upstream to mainstream”. Even now SRI investment portfolios are worth over 3 trillion dollars. I still have trouble comprehending billions so when we start to talk trillions my eyes glaze over.
First, the Calvert Fund. Calvert focuses on environmental, social and governance issues.
Second, Ave Maria is a fund that invests in companies whose policies are consistent with the core values and teachings of the Roman Catholic Church.
Third, Domini Social Investment lists six issues they take into consideration when screening investments – nuclear power; geopolitical stability, weapons and international peace; endorsement of international norms and standards; human rights; respect for indigenous peoples and local cultures; and anti-bribery, anti-money laundering and anti-corruption programs.
Finally the Eventide Fund states that its philosophy is rooted in the biblical understanding that God’s great intent for business is that it serve and in turn bless humankind. They seek to invest in companies that operate with integrity and create value.
As we look for ways, large and small, to impact the economy, our investments are a great opportunity to put our money in places that make every effort to make a positive difference in the world. It may seem almost counterintuitive, but Socially Responsible Investing is large and growing industry worthy of our attention.