By Judith L. Seid, CFP ®
September 1, 2008 (San Diego's East County) -- When you invest, your money works towards achieving two objectives. By aligning your investments with your values, your money can work to create a secure future for yourself and your family, while also encouraging the development of a better future for our world.
Ten years ago, Socially Responsible Investments (SRI) weren’t generally accepted by many trustees and consultants who were responsible as fiduciaries, looking over other people’s money.
Fortunately, a letter from the Department of Labor (DOL) has given investment firms vital support for socially responsible investing (SRI). The DOL sanctioned a letter that endorsed the use of social and environmental criteria in the investment decision-making processes.
According to a survey by the Social Investment Forum, a national organization dedicated to advancing socially and environmentally responsible investing, some $1.49 trillion were held in socially screened, separate accounts managed for institutional clients as of 2004. In 2006 we are up by 27% with $1.88 trillion in assets.
A survey released in June 2007 by the Social Investment Forum and Mercer defined that 129 contribution plan sponsors found that 19% already had an SRI option and an additional 41% planned to add one over the next three years.
Although SRI has proven to be as profitable as “regular” investing, often-times people aren’t motivated to utilize an SRI approach purely for financial reasons; they’re more concerned with supporting companies that are ethical and that are in line with their values.
Socially concerned investors are making difference, actually encouraging major corporations to take positive steps. For example, Ford recently bowed to pressure from a block of shareholders, becoming the first automaker to detail its strategy to reduce its fleet’s greenhouse gas emissions 30 percent by 2020.
Earlier this year, the company shared its plans with investors including activist groups such as the $100 billion-strong Interfaith Center on Corporate Responsibility and Ceres-directed Investor Network on Climate Risk, which represents assets of around $5 trillion. The Connecticut State Treasury also is a participating shareholder.
Ford is not the only automaker to find itself in the cross-hairs of activist shareholders. General Motors is also being urged to follow in Ford's footsteps.
"The target is not even the win here; Ford has wrestled with various analyses to arrive at reduction goals," said Sister Patricia Daly, representative of the Sisters of St. Dominic of Caldwell, N.J., a lead resolution filer. "No other company has entered into this discipline ... Even as a leader in the 'carbon club' Ford opens the door for other companies and industries to target reductions."
The target falls in line with recent auto mileage legislation put in place to improve fuel economy to 35 miles per gallon by 2020. Ford said it would be unable to meet tougher limits for 2016 being sought by California.
The SRI industry has been integral in putting pressure on companies and on government to be more sensitive to our environmental and social impact. It’s an area that affects everybody -- and offers an avenue for people who care to affect the world.
Judith L. Seid, President and founder of Blue Summit Financial Group, Inc, is a certified financial planner who has actively used Socially Responsible Investing (SRI) for her clients since 1992. She firmly believes that “We can influence corporations to change their policies by avoiding investments in irresponsible companies and by seeking investments in companies with positive practices and products.” Socially responsible investing (SRI) exists for investors looking to use the power of financial investment to create sustainable social change. For more information on Sustainable Investing, contact Judith at Blue Summit Financial Group in La Mesa, (619) 698-4330; www.bluesummitinvest.com.