What we think

INVESTMENTS

Social Conscious Investing

by Peter J. Creedon

Are you socially conscious and want your investments to reflect that? You may think conscious investing is more difficult to accomplish than traditional investing, but it might not be as hard as you think.

Most people believe strongly in a one or more issues such as: healthy living, clean water, no smoking, religious ideology, social equality, climate change or lowering our carbon footprint. They gladly inform you of their beliefs and many try to incorporate the values in their everyday lifestyles.

However, it surprises me when I look at their investments and their beliefs are not reflected in their investment portfolio. Sometimes the talk is just that – their beliefs, but most are unaware investing with a conscious attitude is possible. You may think social conscious investing is more difficult than traditional investing to accomplish but it’s not as hard as you think. It has evolved over the years into a responsible investing movement that carries an increasing amount of force and momentum.

Originally it was called Socially Responsible Investing (SRI). There were a few mutual funds focused in this investment strategy. If you had additional money to invest, a portfolio manager would omit industries or companies that were objectionable (tobacco, alcohol, weapons manufacturers, etc.). Over time, the concept grew and now you continue to hear the term, Socially Responsible Investing (SRI) and more frequently, “Environmental, Social and Governance investments” (ESGI). In the last few years a trend emerged from people of higher wealth called Impact Investing. According to Global Impact Investing Network (GIIN), “Impact investing are investments made into companies and organizations with the intention to generate a measurable, beneficial social and environmental impact alongside a financial return”. All the strategies are to achieve a measurable financial return on the investment, so do not confuse these strategies with charity or philanthropy.

Most SRI and ESGI investments can be found in mutual funds or Exchange Traded Funds (ETF). There are over seventy fund choices that account for multi- billion dollars invested. Though achieving a good overall asset allocation may be difficult, there are a good variety of choices so you can achieve a representative position. Impact Investing is a whole different level through a number of methods mostly because of the much higher amounts of money involved.

So my question to you… If you have a strong belief, why is your investment portfolio not reflecting those values? Remember, the more demand for a SRI/ESGI type of products, the more likely it will be created.