It's not always easy being green when times are lean. With less disposable income, people can feel caught between their principles and their bank accounts, unable to give as much as they'd like to charities or other groups. But as more investors are discovering, it's still possible to do well in the market while doing good in the world.
CHARLESTON, W.Va. -- It's not always easy being green when times are lean. With less disposable income, people can feel caught between their principles and their bank accounts, unable to give as much as they'd like to charities or other groups.
But as more investors are discovering, it's still possible to do well in the market while doing good in the world.
Through Socially Responsible Investing, or SRI, investors concerned about their social and environmental footprints can give to companies that share their values, while getting returns on their investments.
"With socially responsible investments, you're both taking care of yourself, like planning for your retirement, and doing something for the whole planet," said Todd Larsen, who works in community investing and public policy for the Social Investment Forum, a national association of businesses, nonprofit groups and financial professionals who consider the economic, environmental, social and governmental impacts of their businesses.
Socially responsible investment has been growing rapidly over the last decade, a trend groups like the Social Investment Forum call the best evidence that it can pay off for the investor.
Funding change
Socially responsible investors use three approaches to support companies dedicated to social issues like keeping the environment clean or promoting equality and human rights.
By researching pre-screened stocks and mutual funds, people can divest from businesses that participate in what they consider negative behaviors, like defense contracting, alcohol and tobacco promotion and animal testing.
They can then choose to invest in companies that use positive practices or make safe products.
Investing in community institutions is another avenue for funding positive growth. These banks, credit unions and loan funds offer the security of traditional financial institutions, but provide financial services to aid communities in the U.S. and worldwide.
"You know you're doing something positive with your money. They operate the same way a bank or credit union does, but you know that money is going to help build stable, thriving communities," Larsen said.
Shareholders can also put their mouths where their money is, by filing resolutions, proxy voting and using their influence as investors to guide a business' policies.
"Early on, there was very little weight behind [SRI], but it will be tremendously effective as socially responsible investing continues to evolve. As their numbers grow, I think their power to influence will become stronger," said John D. Williams, a certified financial planner and the owner and founder of Williams Financial Group in Charleston.
Reaping green returns
About 11 percent of assets managed by professionals in the U.S. are now invested in companies that have been screened using social criteria. Between 1995 and 2007, SRI assets rose more than 324 percent to $2.71 trillion out of the total $25.1 trillion invested in the U.S. marketplace, according to the forum's 2007 Report on Socially Responsible Investing in the United States.
"I don't think it's necessarily a higher-risk way to invest one's money," Williams said. "In a normal economical environment, socially responsible investing has lagged to some degree in terms of performance, but more recently, in a bad economy, it's starting to out-perform," he said.
More than 20 quantitative and peer-reviewed studies demonstrating that SRI mutual funds perform comparably with non-SRI funds have been archived and awarded by the Moskowitz Research Program thought the University of California Berkeley's Haas School of Business.
As SRI becomes the norm for many investors, many companies have started listening to the push for better policies
Today, 86 of the country's 100 largest publicly traded companies on the S&P 100 index disclose their sustainability efforts, compared with 58 in 2005, the Social Investment Forum reports.
"It helps improve their corporate image and usually saves them money in the long run," Larsen said.
Researching to give back
As with all stocks or mutual funds, there are financial risks to investing green. People should carefully consider their options with research or the help of a financial adviser before making major financial decisions.
Making these choices may require extra care and research, as individual investors can have drastically different criteria for what defines a socially responsible business.
"I think first off, invest in what you're passionate about. Be very careful to sit down and come up with a list of what your socially responsible investing goals are and dig deep. Be very specific," Williams said.
Groups like the Social Investment Forum, at www.socialinvest.org, the SRI World Group, at socialfunds.com, and the community investing center at www.communityinvest.org have many free and online resources to help asses the risks while finding the best match for an investor's values.
While some socially screened mutual funds have a specific focus, many are broader in their screening and it is difficult to find funds that screen for all social issues. It is important to diversify, because many of these funds may involve the same companies, Larsen said.
For someone with very specific goals like avoiding child labor or supporting companies that are kind to the environment, it could help to work with a financial adviser to craft an individual portfolio.
"Be careful who you work with. Make sure that person shares your beliefs and interview them to make sure you have a common set of values," Williams said.
West Virginians have not taken as much interest in tailoring their investing plans to their philanthropic ideals as in many places in the county, but Williams said he expects that gap to shrink.
"We're a unique group of people and in many ways that's a good thing, but because of who we are and where we came from, sometimes we are slow to adopt a lot of practices that the nation as a whole has adopted," he said. "We have some catching up to do, but I think we'll continue to see the growth of socially responsible investing in this state."
Screened funds
Buying into a socially screened mutual fund can be an easy way to begin socially responsible investing. Though some funds are based on a specific social issue, most have a broad focus that incorporates companies with a variety of social criteria.
As of 2007, there were 260 socially screened mutual funds in the U.S., with assets of $201.8 billion, according to the Social Investment Fund.
Here are the 10 largest socially screened mutual funds as of July 31, according to the SRI World Group from its Web site, www.socialfunds.com.
Ariel Fund
www.arielinvestments.com
Assets: $2.4 billion
Screening: The fund invests primarily in the stocks of companies with market capitalizations between $1 billion and $5 billion that have environmentally sound policies. The fund does not invest in corporations whose primary source of revenue is derived from tobacco products or the manufacture of handguns, and screens out nuclear energy companies.
PIMCO Total Return III
www.allianzinvestors.com
CHARLESTON, W.Va. -- It's not always easy being green when times are lean. With less disposable income, people can feel caught between their principles and their bank accounts, unable to give as much as they'd like to charities or other groups.
But as more investors are discovering, it's still possible to do well in the market while doing good in the world.
Through Socially Responsible Investing, or SRI, investors concerned about their social and environmental footprints can give to companies that share their values, while getting returns on their investments.
"With socially responsible investments, you're both taking care of yourself, like planning for your retirement, and doing something for the whole planet," said Todd Larsen, who works in community investing and public policy for the Social Investment Forum, a national association of businesses, nonprofit groups and financial professionals who consider the economic, environmental, social and governmental impacts of their businesses.
Socially responsible investment has been growing rapidly over the last decade, a trend groups like the Social Investment Forum call the best evidence that it can pay off for the investor.
Funding change
Socially responsible investors use three approaches to support companies dedicated to social issues like keeping the environment clean or promoting equality and human rights.
By researching pre-screened stocks and mutual funds, people can divest from businesses that participate in what they consider negative behaviors, like defense contracting, alcohol and tobacco promotion and animal testing.
They can then choose to invest in companies that use positive practices or make safe products.
Investing in community institutions is another avenue for funding positive growth. These banks, credit unions and loan funds offer the security of traditional financial institutions, but provide financial services to aid communities in the U.S. and worldwide.
"You know you're doing something positive with your money. They operate the same way a bank or credit union does, but you know that money is going to help build stable, thriving communities," Larsen said.
Shareholders can also put their mouths where their money is, by filing resolutions, proxy voting and using their influence as investors to guide a business' policies.
"Early on, there was very little weight behind [SRI], but it will be tremendously effective as socially responsible investing continues to evolve. As their numbers grow, I think their power to influence will become stronger," said John D. Williams, a certified financial planner and the owner and founder of Williams Financial Group in Charleston.
Reaping green returns
About 11 percent of assets managed by professionals in the U.S. are now invested in companies that have been screened using social criteria. Between 1995 and 2007, SRI assets rose more than 324 percent to $2.71 trillion out of the total $25.1 trillion invested in the U.S. marketplace, according to the forum's 2007 Report on Socially Responsible Investing in the United States.
"I don't think it's necessarily a higher-risk way to invest one's money," Williams said. "In a normal economical environment, socially responsible investing has lagged to some degree in terms of performance, but more recently, in a bad economy, it's starting to out-perform," he said.
More than 20 quantitative and peer-reviewed studies demonstrating that SRI mutual funds perform comparably with non-SRI funds have been archived and awarded by the Moskowitz Research Program thought the University of California Berkeley's Haas School of Business.
As SRI becomes the norm for many investors, many companies have started listening to the push for better policies
Today, 86 of the country's 100 largest publicly traded companies on the S&P 100 index disclose their sustainability efforts, compared with 58 in 2005, the Social Investment Forum reports.
"It helps improve their corporate image and usually saves them money in the long run," Larsen said.
Researching to give back
As with all stocks or mutual funds, there are financial risks to investing green. People should carefully consider their options with research or the help of a financial adviser before making major financial decisions.
Making these choices may require extra care and research, as individual investors can have drastically different criteria for what defines a socially responsible business.
"I think first off, invest in what you're passionate about. Be very careful to sit down and come up with a list of what your socially responsible investing goals are and dig deep. Be very specific," Williams said.
Groups like the Social Investment Forum, at www.socialinvest.org, the SRI World Group, at socialfunds.com, and the community investing center at www.communityinvest.org have many free and online resources to help asses the risks while finding the best match for an investor's values.
While some socially screened mutual funds have a specific focus, many are broader in their screening and it is difficult to find funds that screen for all social issues. It is important to diversify, because many of these funds may involve the same companies, Larsen said.
For someone with very specific goals like avoiding child labor or supporting companies that are kind to the environment, it could help to work with a financial adviser to craft an individual portfolio.
"Be careful who you work with. Make sure that person shares your beliefs and interview them to make sure you have a common set of values," Williams said.
West Virginians have not taken as much interest in tailoring their investing plans to their philanthropic ideals as in many places in the county, but Williams said he expects that gap to shrink.
"We're a unique group of people and in many ways that's a good thing, but because of who we are and where we came from, sometimes we are slow to adopt a lot of practices that the nation as a whole has adopted," he said. "We have some catching up to do, but I think we'll continue to see the growth of socially responsible investing in this state."
Screened funds
Buying into a socially screened mutual fund can be an easy way to begin socially responsible investing. Though some funds are based on a specific social issue, most have a broad focus that incorporates companies with a variety of social criteria.
As of 2007, there were 260 socially screened mutual funds in the U.S., with assets of $201.8 billion, according to the Social Investment Fund.
Here are the 10 largest socially screened mutual funds as of July 31, according to the SRI World Group from its Web site, www.socialfunds.com.
Ariel Fund
www.arielinvestments.com
Assets: $2.4 billion
Screening: The fund invests primarily in the stocks of companies with market capitalizations between $1 billion and $5 billion that have environmentally sound policies. The fund does not invest in corporations whose primary source of revenue is derived from tobacco products or the manufacture of handguns, and screens out nuclear energy companies.
PIMCO Total Return III
www.allianzinvestors.com
Assets: $2.214 billion
Screening: The fund invests primarily in corporate bonds, U.S. government securities and mortgage-related securities. The fund may not invest in issuers engaged in the operation of gambling casinos, the provision of health-care services or the manufacture of alcohol, tobacco products, pharmaceuticals, pornography or military equipment.
Pax World Balanced Fund
www.paxworld.com
Assets: $2.189 billion
Screening: The fund seeks to invest in forward-thinking companies with sustainable business models that meet positive environmental, social and governance standards and avoids investing in companies that are significantly involved in the manufacture of weapons or weapons-related products, manufacture of tobacco products or engage in unethical business practices.
Ariel Appreciation
www.arielinvestments.com
Assets: $1.7 billion
Screening: The fund invests primarily in the stocks of companies with capitalizations between $2.5 billion and $15 billion that have environmentally sound policies. The fund does not invest in corporations whose primary source of revenue is derived from tobacco products or the manufacture of handguns, and screens out nuclear energy companies.
Parnassus Equity Income
www.parnassus.com
Assets: $949.4 million
Screening: The fund normally invests at least 75 percent of assets in dividend-paying equities. It may also invest up to 10 percent of assets in community development loan funds. The fund adheres to certain social criteria; it may not invest in companies that produce alcohol, tobacco, weapons or nuclear energy.
CSIF Equity Portfolio A
www.calvert.com
Assets: $878.3 million
Screening: The fund evaluates criteria in the areas of environmental stewardship, equal opportunity, employee and community relations, and others.
New Covenant Growth Fund
www.newcovenantfunds.com
Assets $824.0 million
Screening: Developed by the Presbyterian Foundation, a portion of the asset management fee supports ongoing gift development and asset management services for the Presbyterian Church. Actively supports responsible practices involving the environment, social and racial equality and community development through shareholder advocacy.
Domini Social Equity Fund
www.domini.com
Assets: $776.4 million
Screening: The fund's current and potential holdings are evaluated against its social and environmental standards based on the businesses in which they engage, as well as on the quality of their relations with key stakeholders, including communities, customers, ecosystems, employees, investors and suppliers.
Neuberger Berman Socially Responsive Investments
www.nb.com
Assets: $772.6 million
Screening: The fund mainly invests in common stocks of mid- to large-cap companies across many different industries. Social criteria include leadership in environmental concerns, diversity in the work force, progressive employment and workplace practices, and community relations.
Calvert Large Cap Growth A
www.calvert.com
Assets: $759.1 million
Screening: The fund invests in both value and growth companies. It will not invest in companies that have poor environmental records, including significant compliance and waste management problems. The fund also engages in purchase of options and futures.
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To learn more about an individual socially responsible mutual fund's cost, performance, size and screening:
Order a free fund prospectus or other SRI guide online at www.socialfunds.com
Visit the Social Invest Forum's Mutual Fund Performance Chart online at www.socialinvest.org/resources/mfpc/
Consult a financial planner for resources on building a portfolio of socially responsible investments.
Reach Kellen Henry at khe...@wvgazette.com or 348-5179.
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