Aligning your investment choices with social causes
We all have social causes that we care about. But it’s not often that those causes and
our investment decisions intersect. This does not have to be the case. As investors, we
can consider both financial return and social good, giving us a chance to support the
causes we care about, while diversifying our investment portfolios.
A rich history
Investing for social good has a rich history dating back thousands of years,
as people have long invested based on their values. In the United States, this
investment approach dates back to the mid-1700s, when the Quakers refused
to invest in any aspect of the slave trade and avoided investing in companies
involved in the liquor, tobacco or gambling industries—the so-called Sin Stocks.
Fast forward to the 1980s, and shareholders, citing their opposition to
apartheid-ruled South Africa, convinced U.S. companies to withdraw
from South Africa, which fueled an international boycott that
brought about change and helped lead to fair elections.
One in four dollars is ESG-managed today
By assessing potential investments using
environmental, social and governance
(ESG) criteria, along with financial
performance metrics, investors can assign
“points” to companies whose practices align
with their values. More points translate to a
higher weighting in the target portfolio.
The ESG market is huge in the U.S. and
around the world. In fact, assets in socially
screened portfolios climbed to $12 trillion.1
According to the Forum for Sustainable
and Responsible Investment, one out
of every four dollars under professional
management in the United States is
involved in ESG.1
The ESG criteria
In general, socially conscious investors seek to encourage corporate practices that promote
religious beliefs, environmental stewardship, consumer protection, human rights or diversity.
Money managers are incorporating ESG criteria into their investment analysis and decision-making.
In 2018, they applied ESG factors to limit investment in the following categories.2
Different terminology, same idea
As you can surmise, there are as many
approaches to Socially Responsible Investing as
there are SRI investors, who may refer to SRI as:
Things to think about
Ruling out companies for practices that you disagree with does
occasionally result in diminished profits. In fact, a good financial
advisor will warn investors that their environmental and social
screens might result in leaving money on the table.
Further, as in all investing, having a broad diversification of your
investment portfolio is always important. Most financial advisors will
therefore recommend mutual funds that cater to socially responsible
principles for this reason. For example, investors who see global
climate change as a significant business and investment risk
can consider investing as part of the portfolio in environmentally
Investing according to your conscience can turn your portfolio into a
powerful agent for change you believe in.
If you are interested in socially responsible investing, ask your
financial advisor to help you find investments that match your values.
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The article above was provided to Synovus by eMoney Advisor, LLC, and is used here with permission from eMoney or a third party content provider. eMoney does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. This information was provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Forum for Sustainable and Responsible Investment. “SRI Basics.” https://www.ussif.org/sribasics. Accessed July 2019.
US | SIF Foundation. “Report on US Sustainable, Responsible and Impact Investing Trends 2018.
”https://www.ussif.org/files/Trends/Trends 2018 executive summary FINAL.pdf. Accessed July 2019.
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