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Sustainable Investing and
Performance
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92% of investors believe that a financial advisor should
investigate ethical as well as financial performance of investments
before making recommendations.1
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84% of investors agree that, in the long run, companies with
high ethical integrity make better investments.2
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71% of investors believe that companies that operate with
higher levels of integrity carry less investment risk.1
1. Harris Interactive Poll, conducted for Calvert, November
2003; 2. Neuwirth Research, conducted for Calvert, August 2003.
There are a range of perspectives, approaches, and strategies to
implementing socially responsible investing. You are probably already familiar with the
idea of avoidance or qualitative screening. But there is much more.
Sustainable investment strategies include corporate engagement through shareholder dialogue, proxy
voting, and the shareholder resolution process. And of high social value, this
sensible approach to investing also includes community investing practices that help individuals and regions
pull themselves out of poverty and regain socio-economic self-empowerment.
The key strategies employed by the sustainable investment
movement are:
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Investment screening criteria and analysis.
Example: You want to screen out tobacco, gambling, nuclear power,
and weapons.
This is simply
avoiding investment in certain industries or practices in your portfolio.
Such "avoidance screening" is usually coordinated through your
sustainable and SRI
mutual fund or separate account manager.
Example: You want to consider the domestic and international labor
practices, environmental practices, and full public
disclosure.
To maintain a diversified portfolio, you have to invest
in companies that are not perfect but have better qualities
than others in their industry. That leads to what happens
next--in shareholder activism.
Such "qualitative screening" is usually coordinated through your
SRI mutual fund or separate account manager.
"In our research, we ask companies questions that they are not used to being asked, about issues that they've never before been told are important. In the U.S. and increasingly in Western Europe, simply putting issues on the table can positively affect management's decision making."
Amy Domini, Summer 2007 GreenMoneyJournal.com.
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Shareholder advocacy and activism.
Examples: You like the idea of your money managers asking a major company to report their EEO data or
global labor standards to
the public, or asking a large media company to not support a
porn network, or getting a large chain to phase out selling
unsustainably harvested old-growth and tropical lumber.
There is prevalent use of this tactic lately by the core
sustainable and SRI community to
get
the companies that made it past the screening stage to
change their ways.
Some big-name companies are taking heed. Recently, shareholder campaigns for
tighter supplier oversight have resulted in steps being taken by Nike
Inc., Wal-Mart Stores Inc. and Walt Disney Co. Disney, where one
shareholder proposal won 43% support, is making sweeping changes to the
way it monitors, audits and reports on contractors. Gap Inc. has also
started releasing more information on overseas contractors' compliance.
Get the latest scoop on what's going on from the Shareholder
Action Network web site.
Shareholder activism is usually coordinated through your
sustainable and SRI
mutual fund or separate account manager.
See Co-op America's special 16-page guide to shareholder
action, Shareholders
In Action. (Note: Large 500k document, not recommended
for slow connections or the impatient.)
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Community investing.
Example: A young couple was a long-term welfare recipient.
They turned to his long time hobby, woodworking for help.
And, with the help of a small loan from a community loan
fund, they were able to turn his woodworking into a business
that now supports the whole family off welfare. Get the
latest scoop on what's going on from the Community
Investing web site.
You can now easily make job creation, child care, and
affordable housing a portion of your portfolio by investing
in professionally-managed community investment notes.
This
office is participating in the 1% for community campaign.
You can too. If you haven't done so already, ask us how. disclaimers
Most people think that sustainable or social investing only has to do
with avoidance or negative screening. Now you know better. If your money is
not participating in each of those four key parts above, you're not fully
participating in the social investing movement.
A common misconception about sustainable investing and SRI is that it will cause lower
financial performance. Well, not necessarily so. You can conduct your own
research on this question from the following web sites:
(see disclaimers)
How Our Services Can Benefit You
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Managing Portfolio Risk
Appropriate asset allocation
(a portfolio's mix of asset classes), can help you manage risk. Many professional investment advisors,
including us, believe that probably the most
important factor in the risk and performance of your portfolio is the asset allocation
that governs your portfolio. Timing and securities selection have been found to be
smaller determinants of performance. Your professionally managed portfolio should utilize
sophisticated asset allocation strategies within the context of an appropriately
diversified mix of investments.
- Through sustainable investing, you can be supportive of a
sustainable society and environment.
- You can free up time to do more of the things in life
you enjoy including spending more time with family, hobbies, and community.
- You may also find you have less need to personally figure out and track economic and investment trends
yet still efficiently oversee your advisor.
Investment services are tailored for you, the socially and environmentally
responsible investor. We feature the First
Affirmative Financial Network investment management services as well as other
approaches that may be appropriate to your situation. We enjoy assisting
clients in
deciding on a sensible course of action.
- You may benefit from one of
several state-of-the-art investment management services utilizing portfolios of socially responsible mutual
funds, folios, and/or separate account management consulting. With financial assets of $1,000,000 or more to be managed, you can
take advantage of these services through this office. All this is coordinated
and
monitored for you through our industry-standard systems, networks, and teams
of professionals.
- Note: If you are starting with less than $1,000,000 you
can probably still participate in similar services--just ask Eric for an introduction
to one of his qualified colleagues.
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- Self-Directed Accounts
- Sometimes, a client wishes to maintain their own
investments or cash-management accounts. In
conjunction with
receiving one of our other services described above, we may be able to assist you in establishing your
self-directed or cash-management account. This kind of account does not receive ongoing management
services but is provided as a client convenience.
Your accounts are normally held via custodial
arrangement with Charles Schwab Institutional Services, U.S. Trust Institutional
Services, KMS Financial Services, Inc.
(clearing through Pershing, LLC), FOLIOfn, or other custodians as fully disclosed on new
account applications. Alternately, for group retirement plans and other special
situations, you may have accounts held directly with a mutual fund company or
other platforms.
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Individual, Joint, and Institutional
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UTMAs
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IRAs (various)
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Retirement Accounts
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Trust Accounts
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Private and Public Foundations
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Endowment Funds
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529 College Savings
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and others, just ask.
"History teaches that both investment managers and clients need
help if they are to hold successfully to the discipline of long-term commitments. This
means restraining themselves from reacting inappropriately to disconcerting short-term
data and keeping themselves from taking those unwise actions that seem so obvious and
urgent to optimists at market highs and to pessimists at market lows. The best shield for
long-term policies against the outrageous attacks of acute short-term data and distress
are knowledge and understanding committed to writing."
Charles D.
Ellis
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info, requests, and contacts
Community
Investing Achiever in the Social
Investment Forum 1% For Community investment campaign since 2002.
Calvert
Foundation Advisor of the Year in 2004.
Learn more!
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