SOCIALLY RESPONSIBLE INVESTING: WHAT IS IT?
Socially Responsible Investing ("SRI") is investing, not only to maximize investor return, but to promote social good in the process.
INTRODUCTION
As a former financial advisor for a large broker dealer, I specialized in financial planning for non-profit organizations who wanted to invest in investment products that reflected their respective social values.
To my surprise, my firm had very little information available on socially responsible investing and the only piece of literature available was a list of 25-30 mutual fund companies that had one or more products under the larger umbrella of "socially responsible investing" without any other information.
It soon became clear to me that the amount of information available out there was limited. There seems to be a misconception (and it's a persistent one) that you give up investment performance if you invest in SRI when, actually, the opposite is true. Typically, companies whose corporate policies support equality, environment and sound management practices, perform better financially as well.
As soon as this truth is widely recognized, larger institutions will start allocating more time, money and energy towards enhancing SRI research and creating more SRI products.
A BRIEF HISTORY
Socially responsible investing got its start in the mid/late 1700's during the slave trade when investors were encouraged not to participate in the practice and was later associated with religious institutions that recommended investors avoid "sinful" companies that produced guns, liquor or tobacco.
In the 1960's socially responsible investing evolved to take on greater social concerns of women's equality, civil rights and labor equality, and in the 1970's added environmental issues and global social concerns, such as apartheid in South Africa.
Since the 1990's SRI has increasingly encompassed the broader arena of positive investments in the environment, social justice and corporate governance (commonly referred to as"ESG", although I'll be using the SRI label because it is still the term most widely recognized as of this writing.)
TRENDS
According to a recent study published by the Social Investment Forum, SRI continues to grow at a healthy pace. In the beginning of 2010, SRI assets reached over $3 trillion, which was an increase of more than 380 percent from $639 billion in 1995, the date of the first report issued by Social Investment Forum's covering these statistics.
Since 2005, SRI assets have increased 34% while traditionally managed assets have increased only 3%. And from 2007 to the beginning of 2010 (during the recession), the increase in traditional, professionally managed assets was less than 1% compared to an increase of 13% in SRI assets. Today, about 1 in every 8 dollars is invested in some form of socially responsible investment.
The Social Investment Forum attributes most of this growth to client demand and to a lesser extent legislation and regulation.
INVESTMENT STRATEGIES
There are essentially three SRI investment strategies:
Positive/Negative Screening:
Positive screening involves actively seeking out companies that are doing good. It allows an investor to select companies whose corporate practices are aligned with their values. For example, if an investor is particularly concerned about the protecting the environment, they might choose to invest in a solar energy company.
Many people think that investing in companies that are promoting social or environmental causes means you have to sacrifice performance but actually the opposite appears to be true. Marc J. Lane, the author of Profitable Socially Responsible Investing found that companies who scored the highest for social and environmental issues actually performed better financially. In fact, according to Lane, the stocks of those companies outperformed the Russell 3000 Index by more than 2.5% over the course of the eight-year study he performed.
Negative screening is just what the name suggests-weeding out companies whose corporate practices or products or services are not aligned with social good. For most SRI investors this traditionally included tobacco, gun, alcohol, gambling and defense contractors. But it's also been expanded to include companies whose management has failed to promote employee equality, diversity or environmental or corporate responsibility.
Sharholder Activism
Shareholder activism involves trying to influence change in corporate practices or policies by talking directly to management or by filing shareholder resolutions that are then voted on by the shareholders of the company. When the idea of shareholder activism was first introduced, the number of resolutions filed by shareholders was less than 20 annually. From 2008 to 2010, the Social Investment Forum reports that over 200 institutions filed shareholder proposals and many of the proposals are being adopted.
Community Investing
Community investing involves the direct investment of capital to underserved members of communities through local community banks/lenders (also called collectively, "Community Development Financial Institutions" or "CDFIs"). These lenders provide access to credit, equity and capital that these individuals or businesses would otherwise never have access to if they were to apply for loans through traditional commercial banks. Community investing can also be accomplished through venture capital funding.
By investing directly in a community, an investor is more likely to have a greater impact on social good. While buying stocks of companies may or may not promote social good, money invested in a CDFI or venture capital fund is put to work directly and right away to promote underserved communities.
SRI PRODUCTS: TRENDS
MUTUAL FUNDS AND EXCHANGE-TRADED FUNDS ("ETFs")
There are now over 250 mutual funds that are specifically designed to align investments with certain social values. Some mutual fund companies are exclusively focused in SRI, such as Calvert, Domini, PAX World, Ariel, Sentinel, Winslow, among others, while more mainstream mutual fund companies like Vanguard, Neuberger Berman, Gabelli, Legg Mason, and Dreyfus, to name a few, have one or more investment products that address certain social concerns, but SRI is not their primary focus.
While mutual funds provide a valid way to invest in a diverse group of companies that represent specific social values, they have certain limitations that you should consider before you invest.
First, mutual funds, generally, tend to be expensive. Many mutual fund companies charge ongoing fees in addition to fees to purchase or sell shares.
Second, mutual funds are a passive way to invest in SRI with no control over company selection. If you take a closer look at some of the holdings of the mutual fund companies that profess to invest in socially responsible companies, you may be surprised to find companies that are not really aligned with SRI values.
And finally, many mutual funds just can't beat a simple, static product that tracks an index, like exchange-traded funds (ETFs). One of the first SRI indexes, the FTSE KLD 400 that began in 1990, has continued to perform competitively -with returns of 9.51% from inception through December 31, 2009, compared with 8.66% for the S&P 500 over that same period. For a fraction of the cost of investing in a mutual fund, you can simply buy shares of an ETF that tracks the FTSE KLD 400 and do just as well if not better.
There are now approximately 26 ETFs to choose from and even though they only account for about 1 percent of the total assets invested in SRI, their assets have grown 225% since 2007, the fastest of any registered investment product.
STOCKS AND BONDS
Perhaps a more direct way to invest in a socially responsible invest directly in the stocks or bonds of solid, financially-sound companies that appeal to your values.
There is a misconception that when you invest in shares of individual companies you are increasing your risk because you are reducing the number of companies you are investing in, concentrating risk to a few investments. This is only true if you don't do your research and invest in companies that are not financially, socially and ethically sound.
To begin your search, several publications release annual lists of the top SRI companies. If you simply don't have time or want to do the research, ETFs are a great option or you can subscribe to New Paradigm Wealth bi-monthly newsletter that offers investment ideas, trends and notable companies to watch.
ALTERNATIVE INVESTMENTS
Alternative investments include hedge funds, venture capital funds, private equity funds, property funds and other unregistered limited partnerships or limited liability companies that are typically available only to accredited and high net worth investors. In other words, these are the investments that usually have high minimum initial investment requirement of $50,000 or more that are only available to a wealthy few.
These are not necessarily for everyone but unlike mutual funds, hedge funds employ managers that have the flexibility to buy and sell using investment techniques and strategies that are generally unavailable or even prohibited by mutual fund companies because of regulatory constraints.
Greater flexibility generally translates to a better ability to adjust to differing market conditions and the potential for higher returns.
This area of SRI has skyrocketed since 2008 with 610% increase in managed assets driven by an increasing interest in clean tech and renewable energy.
COMMUNITY INVESTING: Community Development Financial Institutions ("CDFIs")
Community Development Financial Institutions are made up of: community development banks, community development credit unions, community development loan funds and community development venture capital funds. Each of these is a different type of lender that makes capital available to individuals or small businesses in underserved communities.
Assets in community investing institutions have risen more than 60% since 2007.
Today, many of these institutions are reaching out to their targeted clientele online. Kiva.org is one such organization that specializes in providing micro loans to entrepreneurs in developing parts of the world. The repayment rate is 98.99% and interest rates vary but are more competitive than a bank savings rate.
GLOBAL TRENDS
There are several global trends extending into 2011 that will help drive investment in the SRI space such as the positive outlook for global economic cycle (coming out of a global recession), demographic shifts (booming population growth in Asia and aging population in U.S.), new technology, climate change, among other things, which all play a factor in determining where money flows.
Specifically, green investing related to clean technology and renewable energy is one of the most dominant themes in 2011 driving the increased investments in SRI and in particular SRI alternative investments (ie hedge funds, private placements).
To make smart choices about where to put your money, it's a good idea to take a step back from the different investment vehicles available and take a look at the big picture. What changes are driving investments in the sectors, and specifically, companies that are most likely to perform well in the socially responsible space?
WHERE TO FROM HERE?
Through weekly posts and a bi-monthly newsletter, New Paradigm Wealth hopes to guide investors through SRI options that make sense right now. On our website, I've listed several resources that will provide guidance in making wise investment choices as a socially responsible investor.
Now is the time to align your values with investment choices that are consistent with what you believe in, what you care about, what matters most to you.
Hope to see you on the journey!
You can visit our website at [http://www.newparadigmwealth.com].
Lita Dwight
New Paradigm Wealth
[http://www.newparadigmwealth.com]
Article Source: https://EzineArticles.com/expert/Lita_Dwight/847996
Article Source: http://EzineArticles.com/5533489Socially Responsible Investing Fund
A socially responsible investing fund is an investment vehicle that aims to align the interests of its shareholders with those of society as a whole. This can include investments in environmental, social, and corporate responsibility indexes or funds. By doing so, these funds seek to improve the environment and quality of life for all people while also providing financial security.
Some common factors used to measure this alignment are ecological footprints (the number of resources consumed relative to the size of a person's ecosystem), joint degree granting institutions (which promote workforce diversity), gender pay parity (equal representation among employees based on merit rather than sex), and community development initiatives (which improve socio-economic conditions in local communities).
Blackrock Socially Responsible Investing
Blackrock is a leading investment advisor and global asset manager with over $3 trillion in assets under management. They are dedicated to helping their clients achieve social responsibility goals by investing in companies that uphold community values, promote environmental sustainability, and contribute positively to society.
Some of the ways in which Blackrock supports social responsibility initiatives include: Providing charitable donations through employee matching contributions, donating profits from green investments back into communities (via Green Bond Fund), and electing directors who have demonstrated a commitment to corporate governance principles including sustainability issues.
All of this helps Blackrock continue its longstanding tradition of being an responsible steward of our planet and its citizens.
Socially Responsible Investing App
There are a number of socially responsible investing (SRI) apps available for smartphones, which allow you to track the stocks and investment vehicles that fall into that category. Some of the most popular include Footprint, Good Wealth, and Ethical Money Advisors.
These apps help you to stay informed about how your investments are affecting not just global warming but also social inequality, animal welfare standards, human rights abuses, deforestation rates and more.
They provide interactive charts and graphs so that you can see at a glance where your money is being spent. And if there's something on your mind that relates to one or more of these issues – no matter how small – then they will be sure to bring it up in their updates.
Ultimately, it's important to think about what matters when making decisions around our financial future – both now and in the future – and invest accordingly. By using SRI apps like these, we can make ethical choices without feeling overwhelmed or confused.
Socially responsible investing advisors
There are many different types of socially responsible investing (SRI) advisors, so it is important to do your research before choosing one. Some commonly used indicators for SRI include environmental, social, and governance (ESG) factors. Additionally, some advisors use a value-based approach that considers both the financial performance and sustainability of a company when making an investment decision.
Ultimately, it is important to find an advisor who shares your values and beliefs about ethical investing. You can look for certified or registered SRI advisers through websites like Social responsiblity Investing Network or Sustainable Investor Alliance directory.
Socially Responsible Investing san francisco
There is no one-size-fits-all answer to this question, as the decision of whether or not to invest in socially responsible actions depends on a variety of factors specific to your individual situation. However, some things that are typically considered when making such an investment include the company's track record with regards to social and environmental issues, their financial stability (including how sustainable their practices are), and their ability to provide long-term returns.
Edward jones Socially Responsible Investing
Edward jones is a socially responsible investment firm that was founded in 2013. The company's mission is to "use shareholder value as a guide for making decisions that seek long-term financial performance and social responsibility."
In order to achieve this, EDJ uses three core principles: environmental stewardship, human rights compliance, and contribution toward sustainable development. These principles are integral to all the investments the company makes and are regularly assessed using an ethical framework known as Social Progress Imperatives (SPI), which takes into account eight dimensions of social justice including economic security, education access and quality, health & nutrition, refuge & natural disaster response, democratic participation & governance opportunities, gender equality and resilience against climate change.
EDJ has made significant contributions toward meeting these goals through its philanthropic initiatives such as funding renewable energy projects around the world or providing relief assistance after natural disasters like hurricanes Irma and Maria.
By following Edward jones' Principles of SRI investing®, investors can support companies that pursue positive social outcomes while also benefiting from strong financial performance over time.
Socially Responsible Investing
At Schwab, we believe that doing what's right is always the right thing, and we strive to do our part in making a difference. That's why we offer socially responsible investing (SRI), which helps us invest with an eye on people and planet.
Through SRI, Schwab specializes in identifying companies that are acting responsibly within their community and environmental impact. This can include things like creating sustainable products, reducing waste or pollution levels, addressing social responsibility issues head-on, or paying employees a livable wage. We then use this information to make investment decisions: buying stocks of these companies when they're undervalued by market standards AND selling shares when their value rises above fair value due to positive social or environmental impacts.
We hope you'll consider joining us in this effort! To learn more about how Schwab is helping build a better future for everyone—including investors and the planet—please visit SCHWABSCORP.
Best Socially Responsible Investing
There is no right or wrong answer to this question, as it depends on your personal financial goals and ethical values. However, some of the most socially responsible investing options include donating money to charities that focus on educational opportunities for underserved communities, investing in renewable energy sources like wind and solar power, and boycotting companies that contribute to climate change.
What is Socially responsible investing in
Social responsibility investing (SRI) is a philosophy that seeks to align an investor's goals with those of the society in which they live. This involves taking into account both environmental and social factors when making investment decisions. SRI has become increasingly popular over the past few decades, as investors have come to recognize its advantages: it can lead to improved returns, more efficient allocation of capital resources, and better overall financial stability.
There are many different types of SRI funds available on the market today, including sustainable development or impact bonds, responsible credit products and real estate investments specifically designed for sustainability purposes. Generally speaking, these funds seek to achieve two main objectives: protecting environment and promoting social equity.
The state of Socially Responsible Investing
In recent years, socially responsible investing (SRI) has come under increasing scrutiny. Some people believe that SRI is little more than a way for wealthy individuals to invest in companies that do not reflect their liberal values. Others feel that the principles of SRI should be universal, and all investors – regardless of wealth or political beliefs – should adhere to them.
So far, there hasn't been much evidence to support either viewpoint. In fact, many studies have shown that having a mix of traditional and social investments does not generally impair returns over time. And while it's true that some ethical investments may be more volatile than others, this isn't always bad news: high-growth companies are often better candidates for social investment because they tend to create more jobs and benefit society as a whole in other ways besides profits alone.
Catholic Socially Responsible Investing
Catholic socially responsible investing (CSRI) is a term that refers to the principle of using financial resources in a way that reflects Catholic social values. These values include respect for human life, care for the environment, and dedication to workplace justice.
When it comes to CSRI, there are three main considerations: how funds were obtained, how they will be used, and what impact (if any) they will have on social justice. Funds must be ethically sourced either through direct investment or via activities that support environmentally sustainable practices. Once invested, funds must be managed in ways that protect people and the planet from environmental risk while also addressing economic inequality and systemic injustices.
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