Socially Responsible Investing

Doing well by doing good...

| January/February 1999


Sponsored by:

Calvert Group
Citizens Funds
DB&T Investment Services
Domini Social Investments

First Affirmative Financial Network
Green Century Funds
Pax World Fund
Self Help Credit Union

The following editorial content is excerpted from Real Money newsletter, published by Co-op America. This national non-profit organization helps people shape a better world through their spending and investing power. Real Money also helps people discover saving, investing, and purchasing tips for saner and healthier living--choices that are good for our planet and its people. To order subscriptions ($10) or memberships ($20) call 1-800-58-GREEN, or access their web site at www.coopamerica.org. W hatever your resources, financial planning, sound money management and socially responsible investing (SRI) can help you realize your dreams and goals, and make the world a better place. In many ways, socially responsible investing does not differ from traditional investing. Socially concerned investors pursue the same economic goals as all investors. However, social investors are in search of one additional goal: they seek out companies that demonstrate better social and environmental performance - and steer clear of irresponsible companies. The more investment money that is channeled away from destructive enterprises--industries that pollute, companies that discriminate or employ sweatshop labor, businesses that produce harmful products and corporations that support brutal and oppressive governments--the healthier and more equitable our world will be.

Once you know that you are committed to investing with a conscience, how do you choose which investments are right for you? The key to a good financial plan is to know why you are investing (retirement, buying a home, taking an eco-tour next summer) and for how long. It is also important to know your risk tolerance--what kind of market ups and downs can you feel comfortable with. There are over 155 socially screened mutual funds you can turn to in order to meet your financial and social goals. And you can turn to a SRI financial professional for help in creating a financial plan that addresses your risk preferences, financial goals and social concerns. (Find one in your area on www.greenpages.org.)

What if you do not have a financial plan? What if you find that you are 55, nearing retirement, and cannot stomach the ups and downs of a fluctuating market? What if your aggressive approach has devalued your investments by 40%? Then it would seem fitting to seek out a financial professional for a kick in your assets. A guiding rule would be to "keep your investments balanced by distributing your money amongst many different types of assets" says Richard Torgenson, a registered principal with Progressive Asset Management in Randallstown, MD. "My regular mantra is diversification for long term or short term investments. Money has to go somewhere. If it's not going to the stock market, it's going to bonds, real estate, or foreign markets. Every one of these has been in trouble this year, but by diversifying, your account can grow as a whole, just as the overall economy has grown this year."

In order to help ensure the growth of your SRI portfolio, it becomes essential to take a look at your personal needs. A majority of women investors, for example, may need strategies that differ from those used by men. Most women are realizing that their investments must comprise a large portion of their retirement planning picture. Consider that only nine percent of women over age 40 receive (or expect to receive) an employer-provided retirement benefit, and the few who do receive a pension or other retirement benefits usually end up getting less than one third of the amount paid to their male colleagues.

According to Calvert Group pension consultant Joann Altmark, women planning for retirement can investigate IRA's as a way to save. What's more, IRA's can also be effective retirement vehicles for self-employed women.



Banking can also be part of your SRI strategy. You can choose community development banks and credit unions for your ordinary banking services. That way you know your checking and savings accounts are supporting affordable housing and small business development in economically distressed areas. (For examples, see the chart on socially responsible banks and credit unions.)

You can also find out if your current bank fits your criteria for responsible investing. Simply questioning the banks in your community is a powerful activist tool. In assessing your bank, take a look at where the branches are located. Are any in economically distressed areas? What are its policies for lending in economically distressed neighborhoods locally and in developing countries abroad? Ask to see your bank's Community Reinvestment Act Performance Evaluation. If you are not satisfied with the answers, seek out a community development bank or credit union.