Now that you’ve made
a commitment to protecting our earth by shopping responsibly, following the
Green R’s, and even finding time to volunteer for earth friendly, conscious
causes, have you checked your personal investment portfolio to ensure you’re
not funding companies that work against your values? What are the ways in which
you can ensure that your investments support instead of cause harm to the
planet? Well, following the guidelines of Socially Responsible Investing (SRI)
can give you strategies to finance businesses dedicated to sustainability,
supporting the planet, and sound business practices.
Gone are the days
when people believed that profit and sound social/environmental values were
mutually exclusive. SRI has been around since the 1700s, when the Quakers
refused to engage in the buying or selling of humans. In fact, some of the
best-known early applications of socially responsible investing were
religiously motivated.
The modern era of socially responsible investing evolved during the
political climate of the 1960s when socially concerned investors increasingly
sought to address equality for women, civil rights, and labor issues. Since the late 1990s, SRI has become
increasingly defined as a means to promote environmentally sustainable
development, with many investors considering effects of global climate change a significant business and investment risk. In the USA, there are now around 200 SRI mutual funds available to
investors. Here, and in much of Europe, SRI has grown at a far higher rate than
conventional funds.
Some
tips to ensure that your investments are truly green:-
Examine your portfolio – If you make a careful examination of some of your
mutual fund holdings you may find that they invest in industries which go
against your values. The first step in the process of being a conscious
investor is to understand where your funds are being channeled.
Check with your financial advisor – He/she may well offer a range of socially
responsible investments since most major firms provide these options. Along
with environmental or sustainability concerns they may also consider human
rights issues, product safety, working conditions, child labor, etc.
Essentially you’re looking for those firms which make a profit while also
behaving in a manner which takes into account sound environmental, social and
governance practices (ESG).
Consider green investment companies – While major financial firms offer a range of SRI
options, there are many well-established companies that specialize exclusively
in SRI funds. Check out sites such as SocialFunds.com and CSRWire.com for more
information. Some of the more well-known SRI investment firms include Trillium
Asset Management, Clean Yield Group, Calvert, Domini, Boston Common Asset
Management, etc.
Research your funds – As with any investment you will need to ensure you find out exactly
what costs you may incur, etc., versus the likely profit. Depending on your
findings and your own financial goals, you may decide to invest in small or
large companies, domestic or international. There are three leading indices
used to identify 'sustainable' investments, namely Dow Jones Sustainability
Indexes, FTSE4Good, and Innovest Strategic Value Advisors.
Invest with meaning – One of the true pluses of values-based investing is that you can
often interact with those who benefit from your investment and see the direct
impact of the results. Check out sites like Kickstarter, Kiva and Acumen Fund
which provide this unique opportunity. You can help the start-up of an urban
farm in Atlanta or finance the operations of a small coffee co-operative in
Guatemala, supporting small-scale investing which adds tremendous value above
and beyond the bottom-line.
Speak up –
As a corporate stockholder you have more leverage than the average consumer and
can use this position to push for change if you believe the corporation’s
operations/behavior is moving in a direction which is not in sync with the
values it professes. The onset of “shareholder activism” has seen stockholders
draft petitions, pressure management, participate in proxy votes and engage in
a range of activities designed to change company policies.
SRI can help us to
manage our investments so that we may share our values, change the world and
ensure a sound return!
