Investing in a Better World
We all know that a strong investment portfolio is a part of a healthy savings strategy – but can it also be something that can make the world better? Yes!
Spending money is way to vote with your dollars and support companies whose business practices reflect your personal values. Investing is no different. In fact SRIs (Sustainable, Responsible, and Impact investments) are among the fastest growing sectors – with assets in SRI funds increasing from $641 billion in 2012 to 1.93 trillion in 2014, according to the Forum for Sustainable and Responsible Investment.
So, you can serve your own investment strategies while also saving the world? What are you waiting for?
Well…there are a couple of things that you should think about first.
When you begin to look at a new investment, it’s important to determine your values first. With a traditional investment, you will weigh and decide whether an aggressive strategy with high risk or a conservative strategy with low risk is most in line with your goals. Similarly, with an SRI, you need to decide if you are interested in Impact First investments, (investments that value social impact over returns) Financial First investments (meaning that social impact is possible, but financial returns are the focus) or a blend of the two.
Moreover, socially responsible investing can be reflective of different levels of values.
Here are some concepts for you to consider as you review your investment options so as to maximize a level of social impact that supports your personal views and benefits you in monetary returns.
-
1
SCREEN.
At its core, socially responsible investments support companies or buy into mutual funds that focus on the values of environmental responsibility, workplace diversity, and work to increase product safety and quality. So, this step is to screen out investments in your portfolio that do not meet those core values. For example, investing in big tobacco would be incompatible with the values of socially responsible investing. There are definitely investments that have a broader list of social value requirements but the big three mentioned above are the minimum requirements.
-
2
DIVEST AS NEEDED.
Once you’ve identified investments in your portfolio that are not reflective of your values, it is time to divest yourself and re-invest in more socially responsible areas.
-
3
STAY INVOLVED.
It’s easy to invest your money and then step away, letting the dollars do their thing until your next quarterly report. If you’re truly dedicated to the cause – then staying on top of corporate behavior is critical. As a shareholder, you have a strong voice and can influence decisions that will benefit the company financially as well as the community, too. Initiate conversations with corporate management, raise areas of concern, and continue to make a difference with both your voice and your dollars.
Investing involves risk including loss of principal. No strategy assures success or protects against loss.
Investing in mutual funds involves risk, including possible loss of principal. Value will fluctuate with market conditions and may not achieve its investment objective