Bringing It All Back Home

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Sustainable and responsible investing (“SRI”) takes many forms. The movement started with a focus on excluding the stocks of weapons manufacturers and other defense contractors. The so called “sin stocks” of companies in the tobacco, alcohol, gambling and pornography businesses were also typically excluded. Much of this stemmed from the religious orientation of some of the pioneering SRI mutual funds such as Pax World. In fact, their first fund was started in the Vietnam era by a couple of Lutheran ministers who wanted to create a core investment option that excluded weapons makers.

In the 1980’s, the attention shifted heavily to the South African divestiture campaign that set out to bring down the Apartheid regime. Nelson Mandela has said that the financial pressure brought to bear by SRI activists from college campuses to corporate boardrooms was a key element in the eventual demise of Apartheid. The international boycott weakened the economy to such an extent that the government eventually relented to the will of the global community and started repealing the segregationist laws that had been on the books for decades.

As hugely important as the success of the anti-Apartheid movement was, there was a growing realization that negative screening would only take us so far. We also needed to proactively identify companies who contribute to a more peaceful, healthy and sustainably prosperous world. This forces investors to be very intentional about not only what they want to avoid, but also what they want to support. SRI mutual funds set up a variety of positive screens around such issues as racial and gender diversity in management and on boards of directors.

Investors who were looking for a more active role in influencing corporate behavior started what we now call shareholder advocacy or engagement. In many cases, being at the same table as management and engaging them in constructive ongoing dialogue has been an extremely effective means to bring about change.

The third pillar of SRI is community investing. Screening and shareholder advocacy are critical tools for social investors but for me, investing in our local communities has the greatest and most tangible positive social impact. Our purchasing habits as consumers along with our choices of saving and investment options can truly make or break a community. Every dollar we spend, save or invest has an impact but it’s up to all of us as individuals to decide what that impact will be.

We have several great ways to support the local economy. I’ve written in these pages before about the Community Loan Fund of the Capital Region (www.mycommunityloanfund.org) and still consider that an extremely powerful way to channel capital to underserved groups in our area. Green America’s Community Investing Guide is a great resource and provides a helpful primer on community investing in general along with a list of high impact, local investing options. You can obtain a free PDF of this guide here: http://www.greenamerica.org/socialinvesting/communityinvesting/orderguide.cfm. Of course, investors need to do their homework to make sure that a particular product is appropriate given their objectives, risk tolerance, time horizon and tax situation. This is especially important since many community investment vehicles are not insured so there’s no “safety net”.

I’d be remiss if I didn’t also take this opportunity to stress the importance of supporting our local farmers. While it may be too late to join a CSA for this summer, we’re blessed with a number of amazing farmer’s markets. Buying as much of our food as possible locally is one of the most effective ways to foster a vibrant and resilient local economy. Fresher, safer, more nutritious and energy efficient, locally sourced food represents a win-win for the environment and our communities. This may not be exactly what the inscrutable Mr. Dylan had in mind but community investing is truly about “Bringing It All Back Home”. Keep it local, keep the faith, and enjoy all of the bounty and beauty this area has to offer.

Harry Moran helps socially conscious investors define and achieve their highest goals by aligning their money with their values. A 26-year veteran of the financial services profession, Mr. Moran has held the Certified Financial Planner® designation since 1991. He is a member of First Affirmative Financial Network, a national professional organization dedicated to meeting the needs of the socially conscious investing community, and a member of the Impact Investing Division of Portfolio Resources Advisor Group, a registered investment adviser. Mr. Moran can be reached directly at Sustainable Wealth Advisors at hmoran@prg- group.net or 518-450-1755.

Mention of specific securities, funds, or companies should not be considered an offer or a recommendation to buy or sell the security, fund, or company. To determine the suitability of any particular investment, please consult with your investment adviser. Remember, past performance is no guarantee of future results and no investment strategy can assure success. The opinions expressed are those of the author and may change without notice. Securities offered through Portfolio Resources Group, Inc., member FINRA, SIPC, MSRB, SIFMA.

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