For many, Socially Responsible Investing (SRI) is a way to align their investments with their personal values and beliefs.
What are SRIs? Socially responsible investing (SRI) allows investors to curate their portfolio by investing in companies that do good for the environment. Socially Responsible Investments, according to Morningstar ”The general premise is to give investors peace of mind by using screens based on moral criteria that create an acceptable universe of investment candidates. Gun manufacturers, distillers, Big Oil, and some pharmaceutical companies typically fail to pass those screens.” So we often ask for a little more detail and guidance, since the options are always multitudinous.
Some Thoughts from Sandy Emerson, volunteer, and former Board member, of Fossil Free California. Courtesy: Richard Godfrey
What Comes After Divestment?
When I woke up to the climate crisis in 2014, I also woke up to the fact that my personal portfolio was full of fossil fuels. I thought divestment from fossil fuels was an obvious first step I could take to align my money with my values, and I immediately pledged to do so. The Divest-Invest movement was in its infancy - it has since grown to represent assets totaling $40 trillion dollars!
When I told my portfolio manager that I wanted to divest my fossil fuel holdings, her eyebrows shot up and she said, “Why would you want to do that?”. That’s when I realized that my next step would be to educate my portfolio manager about the realities of climate change and the urgent need I felt to stop supporting climate chaos with my investments.
Even after I made my parameters clear (no fossil fuels!), divesting my portfolio has been an ongoing process. Every time my advisor puts me into a new mutual fund, it’s up to me to judge whether that mix of investments is appropriate for my portfolio.
Once you’ve divested, what comes next? There are hundreds of climate-positive choices for investors, and investments in renewables have often outperformed investments in fossil fuels. To find out how to divest unwanted assets and invest your values, you need to know what you own, and what you want to own! You and your advisor can get answers from As You Sow (the Invest Your Values dashboards) and Green America (see the “Finance” section). Fossil Free California is a divestment advocacy organization. lists the resources already mentioned and has additional information about banks and insurance companies on its Move Your Money campaign page.
Morningstar Ratings
. So what’s the difference between SRIs, ESGs, and ETFs? The answer to that question is available at the University of Google. Meanwhile, if you don’t want to divest, you can always invest, and most likely you have for many years, with an investment manager. Especially if you are in the Third Act generation. Here’s a typical rating for ESGs (environmental, social and governance) provided by Morningstar, listing the top 15 out of 46 opportunities that have a good track record. You may prefer to explore only SRIs (socially responsible investments)
