Socially Responsible Investing

 

SOCIALLY RESPONSIBLE INVESTING
 
By
Sanjay A. Das, CFP®, CLTC
 
 
It seems like everywhere I turn there are more people talking about Socially Responsible Investing.  What is Socially Responsible Investing (SRI)?  SRI is a way of having control over how your money is invested based on your ethics and values. It tries to balance financial return with social good. Many of the tenets of SRI have been around for centuries- the Quakers practiced a form of SRI in the 1700’s. 
 
SRI can be as simple as choosing not to invest in a company that deals in alcohol, tobacco, or gambling.  However this is just the tip of the iceberg and the new paradigm of investing encompasses environment, social justice and corporate governance.  With today’s access to information people are able to take control of their investment decisions and may choose to make their values heard in corporate boardrooms.
 
Here is an example of social sectors that people might choose to “screen” out of their investment portfolios:
 
·        Adult Entertainment
·        Alcohol
·        Animal Welfare
·        Board Diversity
·        Contraceptives/Abortifacients
·        Environmental Performance
·        Firearms
·        Gambling
·        Human Rights
·        Labor Relations/Workplace Issues
·        Nuclear Power
·        Stem Cell Research
·        Tobacco
·        Military Weapons
 
With SRI, there is no right or wrong answer, rather it is a very personal decision and each person has a unique perspective on the world around them. It is not uncommon to find close family members that have very different priorities on social issues. 
 
One of the negatives of SRI in the past has been portfolio performance. However, due to many factors such as competition, lower costs and technology, sub-par performance for SRI portfolios might not be expected. According to the Social Investment Forum (2005 Report on Socially Responsible Investing Trends in the United States), “empirical research has repeatedly confirmed that, when properly managed, risk-adjusted, and controlled for investment style, socially-screened portfolios perform comparably to their unscreened peers”. 
 
As was mentioned, SRI is very personal and goes to the core of an individual. Rather than have a company define the meaning of SRI, let yourself take control and find your own definition.
__________________________________
If you are interested in learning more, please call Mr. Sanjay Das at (206) 763-4350 or e-mail: sanjay.das@natplan.com. Sanjay Das is a Certified Financial Planner® and Certified in Long Term Care (CLTC). Please visit my website at:
 
Securities and Advisory Services offered through National Planning Corporation (NPC), member FINRA/SIPC, a Registered Investment Advisor.