Reflects Our Values

On nights when millions of stock market shareholders are losing sleep over a teeter-tottering Wall Street, there are likely to be just as many socially responsible investors dozing restfully, because their money is doing well at the same time it is doing good.

According to Rachel MacKnight, a spokesperson for the Social Investment Forum (SIF), these shareholder activists, who align their personal and social values with their investment decisions, rest easy knowing that their $2.71 trillion is making a positive difference morning, noon and night.

In 2005, SIF, the only national membership association dedicated to advancing the concept, practice and growth of socially and environmentally responsible investing (SRI), reported that only one out of nine investment dollars in the United States was actively invested in socially screened portfolios. That’s 11 percent of the $25.1 trillion in total assets under management tracked in Nelson Information’s Directory of Investment Managers. From 2005 to 2007, SRI assets increased more than 18 percent, while those of the broader, professionally managed assets increased less than 3 percent.

“SRI, which today means sustainable and responsible investing, has its modern roots in the 1960s, a tumultuous decade that escalated sensitivities to issues of social responsibility and accountability,” remarks Steve Schueth, president of First Affirmative Financial Network, LLC. The investment advisory firm specializes in serving socially conscious individual and institutional investors.

Concerns regarding the Vietnam War, civil rights and equality for women in the 1960s, broadened during the 1970s to include labor-management issues and anti-nuclear convictions. “By the 1980s, millions of socially conscious investors, churches, universities, cities and states were focusing investment strategies on pressuring the white minority government of South Africa to dismantle its racist system of apartheid,” says Schueth. Then, when citizens around the world were handed the Bhopal, Chernobyl and Exxon Valdez incidents, “The environment shot to the top of the socially concerned investor’s list. Since then, the climate crisis has awakened investors to opportunities for directing investment capital in other transformative ways.”

Peter Mangold, a Smith Barney financial advisor in Boulder, Colorado, appreciates being able to introduce clients to the idea of investing in companies that are attempting to minimize environmental damage or that are developing techniques to improve energy efficiency, recycle industrial wastes and combat global climate change. “Some of my clients like the idea of investing and helping to protect the environment at the same time,” says Mangold.

Schueth points out that many socially conscious investors feel a sense of responsibility for the impact their money has in the world. He explains, “They believe that they can make money and also make a meaningful difference by consciously directing investment capital toward enterprises that contribute to a clean and healthy environment, treat people fairly, embrace equal opportunity, produce safe and useful products and support efforts to promote world peace.”  Some investors prefer to put their money to work in a way more closely aligned with their personal values and social practices. Others are more interested in social change. They all seek to catalyze the shift toward a more economically just and environmentally sustainable world.

Three complementary strategies have proven effective: screening portfolio holdings to avoid corporations with poor records on social and environmental issues; shareholder advocacy efforts to positively influence corporate behavior; and community investing that directs capital to people in low income communities, who have difficulty accessing funding through conventional channels. Socially responsible investors can choose their preferred approach and level of involvement.

Elle Gulsoy, a resident of Fairfax, Virginia, is an economist and socially responsible investor through EquityBuild, Inc., a real estate investment advisory organization that collaborates with small local banks with deep roots in their communities.

Says Gulsoy, “I’m a mother who is feeling very good about the double bottom outcome of my investments. Ultimately, my ventures translate into beautiful, affordable rental homes, available to low-income single mothers, via government subsidies. It makes me feel good to know that mothers like me, who are struggling to work and raise their children, are having a better life because of my investments.”

Peter Krull, founder of Krull & Company notes, “SRI is strong because people are working together. Whether you have one thousand or one million dollars invested, you are effecting change.”

Dan Smith, editor of Valley Business FRONT in Roanoke, Virginia, is one of Krull’s clients. As Smith remarks, “I like knowing that my money is not being used to support government troops in Darfur, heedless drilling, flavored cigarettes for kids or Nikes built by 10-year old children. Some peace comes in knowing that my investments are supporting what will be of value to humankind and, perhaps, to me.”