In Focus: Socially Responsible Investing 0


Out with the traditional notions of investing; investors are changing the industry and world by aligning their standard of high monetary return with their desire to do good.  According to US SIF, $3.74 trillion of the $33.3 trillion assets in the 2012 US investment marketplace was under management that used Socially Responsible Investing (SRI) strategies.

Social and responsible investors range from average investors to family offices to institutions that put their money into companies with strong Environmental, Social, and/or Governance (ESG) standards. Examples of investment-worthy companies are those that reduce their impact on the environment, commit to fair labor practices, or advocate human rights.

With an abundance of mechanisms – mutual funds, Exchange-Traded Funds (ETF), Certificate of Deposits Account Registry Service (CDARS), etc. – investors are increasingly becoming active in the SRI scene. As of 2012, there were 333 mutual funds with $640.5 billion in assets in the US.

How do you do it?

Try one or more of the following options:

1.     Screening: using positive and negative filters to evaluate investment portfolios with strong ESG characteristics. Screening is most often associated with negative filters / divestment in “sin” (tobacco, gambling, etc.) funds.

2.     Shareholder Advocacy: investors actively communicating with the company’s corporate management team on ESG issues of concern. Shareholder Advocacy is the media grabber because it uses educating the public to put pressure on companies to solve questionable practices.

3.     Community Investing: putting capital into communities that typically don’t have access to capital, equity, credit, and basic banking products.

The bottom line is two fold.

One, people want to see a positive impact from companies they invest in, and look for companies that align with their values. Whether the connection is with their personal life or professional goals, investors want to see more companies align with good ESG values.

Two, social and responsible investors are firm believers that good guys finish first. They believe that socially responsible companies have advantages such as better company efficiency, stronger employee relations, and are overall better positioned against their competition.

Social and responsible investors recognize that money has an impact. They know, as Amy Domini, founder and CEO of the SRI fund Domini Fund, said, “The way we invest creates the world we live in.” So invest wisely.

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About Jade Jones

Jade Jones is a Mosaic Fellow and part of the Mosaic Blog Leadership Team. She is an electrical engineering grad that swayed to cleantech after joining UCSB’s Engineers Without Borders chapter. Since graduating, she has worked with multiple organizations focused on advancing economic, environmental, and social prosperity.

Disclaimer: Any opinions expressed herein by persons not affiliated with Mosaic reflect the judgment of the author and not necessarily that of Mosaic. Nothing herein shall constitute or be construed as an offering of securities, or as investment advice or recommendations by Mosaic. Mosaic’s investments are limited to investors who meet applicable suitability standards based on income, net assets and state of residence. Please click here to learn more.

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