Why SRI?

SRI – Sustainable, Responsible, Impact Investing (aka Socially Responsible Investing)

If you are reading this, you are probably hoping to find a different and more potent way to invest. You hope your investments will generate a positive return, but you’d also like to invest in something you believe in, something that contributes to the welfare of people, communities, and the planet. You are in the right place!

SRI is an evolving group of investment strategies that allow people and organizations to invest their assets in potentially profitable ways while at the same time incorporating and reflecting their social and environmental values.

A well constructed investment portfolio typically consists of several types of investment assets (stocks, bonds, mutual funds, cash and more) designed to achieve an investor's financial goals with an acceptable amount of risk. When considering what to include in a portfolio, portfolio managers evaluate a variety of financial attributes of the companies and/or governmental entities that issue them, attributes like profitability, growth, and liquidity. In other words, investment selections are made by screening for financial health and potential. SRI portfolio managers do this and more, screening not only for financial health but also for environmental, social, and governance factors. 

SRI investors and their managers invest in companies that act in a socially and environmentally responsible manner. Such companies consider the impact of their business practices on all of their stakeholders - that is, their shareowners,customers, clients, employees, the communities in which they operate, and the natural world. 

SRI investors also avoid investing in companies they judge to be harmful, like tobacco or firearms manufacturers. Research studies have concluded that companies with strong social responsibility practices are actually superior investments.

Investors who own shares of a company’s stock (shareowners) have an influential voice in the policy-making and actions of the company. SRI shareowners actively make their voices heard in a variety of ways. Some engage in letter writing campaigns to management to express their opinions. Others file or sponsor resolutions to be voted on at a company’s annual shareowner meeting (either by proxy or in person). Recent shareowner resolutions receiving significant support and publicity were linked to executive pay levels, board seats for women, and environmental stewardship. SRI shareowner advocacy initiatives have become increasingly influential and often result in dialogues between shareowners and companies that result in better, fairer, and less harmful business practices. 

SRI investors also seek out investments with high impact, for example, investments that specifically direct capital to underserved communities (community investments) or alternative energy projects (ex. wind farms) helping to alleviate climate change.

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Seeking Better Companies - ESG

While traditional financial analysis is an important starting place in investment evaluation, we add essential environmental, social, and governance (ESG) analysis.

  • Environmental analysis looks at data like carbon emissions and environmental fines, as well as company commitment to sustainability and green business practices.

  • Social analysis looks for factors and policies that promote human rights, product safety, fair labor practices and nondiscrimination in all its forms.

  • Governance analysis looks at issues of corporate culture, how the company makes decisions about executive compensation, salaries, benefits, gender and racial diversity. Incorporating ESG factors integrally into investment analysis leads not only to portfolios of better companies, but also more financially sound companies.

Shareowner Advocacy

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We actively dialogue with companies on environmental, social, and governance (ESG) issues in order to encourage responsible companies to be even better. We engage in responsible proxy voting on behalf of our clients, according to published, comprehensive proxy guidelines. When dialogue is not successful, we file or sponsor shareowner resolutions in order to raise awareness of ESG issues to shareowners and the public. We also take part in public policy debates that encourage responsible financial and corporate citizenship.

Impact Investments:

  • Provide access to capital in economically disadvantaged areas to help people secure affordable housing or start a small business.

  • Create jobs and finance small business development.

  • Support microfinance organizations operating in developing countries, providing very small loans that generate transformative, beneficial changes in the lives of the poor.

  • Support fair trade and sustainable farming and forestry practices.

Impact Investing

SRI investors want to make a difference while they make a profit. Some investments are designed specifically to have greater social and environmental impact. Our clients commonly direct a portion of their portfolios into these investments. Some impact investing vehicles are available and appropriate for all investors (ex. community bank savings accounts, CDs, and affordable housing mutual funds) while others are private investment arrangements requiring substantial upfront investments that are non-liquid and appropriate only for higher net worth individuals or institutions.

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SRI Performance

SRI is a sophisticated investment process that has evolved over decades. SRI investors expect to earn a competitive rate of return and there is clear and convincing evidence they do. USSIF - The Forum for Sustainable and Responsible Investment, has published rigorous studies demonstrating that SRI portfolios offer comparable investment performance to non-SRI portfolios. Many studies have found a positive relationship between robust company ESG scores and financial performance. The substantial growth in SRI in recent years, particularly among state pension funds, university endowments, and foundations, also point to competitive rates of return. Fiduciaries of these institutions are required to seek adequate portfolio performance and they are realizing that with SRI.