Just as consumers find how they spend their dollars creates the world they want to live in, investors can impact change with a portfolio that includes socially responsible investments. While Socially Responsible Investing (SRI) isn’t a new concept, the last decade of research, vetting and examination of returns has solidified its place in the vocabulary of a socially-conscious investor.
Jack Schniepp (CFP®, ChFC®) is a Certified Financial Planner and owner of Cascade Financial Strategies, the only firm in Central Oregon that is a member of the US Forum for Sustainable and Responsible Investing (US/SIF). He explains, “In simplest terms, SRI is finding investments that don’t compromise a client’s values and the causes they care about, or actively finding investments that make a positive impact on those causes.” And today, aligning a portfolio with personal values and financial goals doesn’t have to be mutually exclusive. In fact, when investors put capital in forward-thinking companies that adhere to Environment, Social and Governance (ESG) criteria (see below), returns can potentially be just as high, if not higher as actions pay off over time, according to a 2019 study by Morgan Stanley’s Institute for Sustainable Investing that examined 13,102 mutual funds and separately managed accounts. And investors have taken note. The US/SIF Foundation reported of professionally managed assets—$1 of every $4 invested in the United States were under ESG strategies in 2018. And investment flows into US Sustainable Funds more than tripled in 2019, according to Morningstar. “There is a way to invest where you can make an impact with your dollars,” says Jack. “You don’t need to give up returns to get returns.”
Here are three tips to begin Socially Responsible Investing:
1.) Choose Your Cause. When investing according to your values, reflect on the causes most important to you, whether related to race disparity, gender equity, religion, clean energy, fair-trade commerce, or even a niche area. Today, one of the biggest areas of concern is the climate, and websites like FossilFreeFunds.com allow you to see if funds invest in fossil fuels. Learn more about SRI from organizations like the US/SIF, and their website USSIF.com. Follow blogs like SRIBend.com for introductions, education and trends in this growing area.
2.) Invest Responsibly. Learn about the additional scrutiny applied to an SRI portfolio. This includes the assessment of environmental, social and governance (ESG) criteria along with traditional research to make investment decisions. ESG criteria can help uncover an investment’s exposure to, and management of risks, opportunities or potential controversies. For example, does a company reduce waste with its packaging, or vet its supply chain (Environmental)? Does it take care of its employees with programs that promote health and safety (Social)? Does it have a diverse board of directors (Governance)?
3.) Consult a Professional. Find an advisor with a Certified Financial Planner (CFP®) designation, the highest professional training to provide guidance in creating a comprehensive investment portfolio that melds a client’s values and long-term financial goals. Look for a CFP® that specializes in Socially Responsible Investing to help navigate the complex, but rewarding landscape of socially-conscious investing.
Cascade Financial Strategies
243 NW Scalehouse Loop, Bend.