Sustainable, Responsible, Impact Investing (aka Socially Responsible Investing)
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.
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.
Seeking Better Companies
- 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
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 Investing
- 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.