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Socially Responsible Investing

While it can go by many names, socially ersponsible investing (SRI) is based on the belief that what you invest in is as important as the money you make. Whether you live here in the Pioneer Valley of Massachusetts or anywhere around the country, we can tailor your investments so they have a positive impact on the environment and society.  We can also advise you on new innovative strategies for putting your money to work, such as social entrepreneurship.

As a fee-only firm, High Ridge Financial Planning believes that SRI investors need to have portfolios that have balanced asset allocations, are well diversified, low-cost, and periodically rebalanced.  While financial results documented in numerous academic studies have shown that SRI investment startegies do not hinder a portfolio manager's financial performance, the limited mutual fund offerings can provide challenges in developing a balanced, low-cost portfolio. 

For SRI investors we highly recommend the consolidation of assets with a low-cost brokerage firm to allow for the investment in multiple fund families. In developing portfolios, we utilize no-load mutual funds and exchange traded funds (ETFs).  We favor a combination of index funds and top performing mutual funds based on the percentile ranking for each asset class.  The goal is ensure that your portfolio is diversified and is invested with the best money managers in the field while keeping costs low and maintaining adherence to your values. 

Doug Wheat, Principal of High Ridge Financial Planning, has more than 9 years of professional involvement in SRI and has spoken at many industry conferences. Doug is active in following developments in the field, including the new shift towards sustainability investing.  This trend focuses on utilizing corporate social and environmental performance as a value added method of identifiing companies with better financial prospects rather than simply screening out companies from an investment universe. He also closely follows the alternative energy and natural products companies and industries.

The three traditional aspects of SRI - Shareholder Advocacy, Screening and Community Investing – are discussed below.

Shareholder Advocacy
Positive change through shareholder resolutions and proxy voting.
If you own stock in a company and want to help change its environmental or human rights practices, you can participate in the shareholder resolution and proxy voting process. It may seem boring but shareholder resolutions can result in real corporate change. And as an stock holder you are an owner in a company, you have a right to participate in the process.

Example: Due to a resolution filed by a shareholder in 2002 that received support of 58% of the shareholders, Cracker Barrel restaurants adopted a nondiscrimination policy that included sexual orientation (read more).

Screening
Company inclusion or exclusion based on specific criteria.
Screening is the process of limiting your potential universe of investments through standardized criteria. Social investors may use environmental, human rights, work place issues, or other ethical criteria to limit the universe of companies in which they will make an investment. Social investors may also seek out companies for specific attributes such as diversity, green products, or alternative energy. The new emphasis of SRI and SRI mutual funds is sustainability issues and less on exclusion issues like alcohol and gambling. See the SRI mutual fund screening criteria on SocialFunds.com

Example: Flex-funds Total Return Utilities Fund does not invest in energy companies that own or operate nuclear power plants.

Community Investing
Creates financing for people not able to access money from traditional sources
Holding some portion of your cash in community investments is a very simple way of supporting economic development in underserved areas. Investors can choose to direct their investments near their home, such as western Massachusetts where High Ridge Financial is located, or have it impact more globally. Micro-credit is a type of community investing that received world-wide attention in 2006 with the awarding of the Nobel Peace Prize to Dr. Mohammed Yunus a pioneer of the field (read more).

Example: Holding money market funds, CDs, or bank accounts at community development banks, community loan funds and credit unions directly supports community and economic development.

Social Investing Resources

SocialFunds.com - detailed information on SRI mutual funds and daily investment stories

Socialinvest.org - the trade association of the SRI industry with lots of information

SRI-ETF.com - information about SRI and alternative energy exchange traded funds.

Jenniferladd.net - consulting on philanthropy, money & class, and you & your money