Re-published from the October 2014 issue of Natural Awakenings Magazine, NY Capital District Edition
Put Your Money Where Your Heart Is
by Sandra Yeyati
Socially responsible investing (SRI) is increasingly becoming an attractive strategy for individuals that wish to align their investments with the social and environmental values they hold dear. In the United States, SRI makes up roughly 11 percent of all investments—not an insignificant chunk of the overall financial universe, according to Harry Moran, founder of Sustainable Wealth Advisors (SWA), in Saratoga Springs, who specializes in SRI and passionately believes in its potential to positively impact our world while serving the financial aspirations of his clients.
After working for a larger investment firm for 19 years, Moran decided to go out on his own in 2011 and create a practice that focuses on sustainable investing. “I’ve been doing some work in this space for a long time, going back to the late 1980s,” he says. “Since 2001, I focused my practice on it, but in my former company I was doing that kind of work in the context of a larger traditional financial firm. What I wanted to do was to be able to design the whole practice with that theme in mind.” Moran believes that his independence from a traditional firm is an important distinction, saying, “I don’t work for a company that is requiring or encouraging me to use any particular kinds of products. I’m able to run my practice and recommend whatever investments are appropriate for a client.”
When Moran first meets a client, he begins by asking the same fundamental questions that a traditional firm would ask, including what level of risk are they comfortable with, the length of time they will hold their investments and their financial goals. But where things get different are his questions about a client’s social and environmental views. Moran explains, “Right up front, I get to learn what’s important to them, and not just about how much money they might need to retire or to send a child to college, but their worldview—what they care about, issue by issue, from corporate governance to diversity in the boardroom to energy-related issues and women’s reproductive rights—all of those kinds of things will work into the mix, so that when I get to the point of designing an investment portfolio, I’m not only covering the financial basics, but I’m also putting into place some detailed customized screens that reflect my clients’ preferences in terms of social and environmental issues.”
When SRI first started, the focus was primarily on negative screening—identifying companies that investors should avoid because of bad environmental track records, for example. According to Moran, this is a reasonable starting point, but where it gets much more interesting, and where there’s a lot more possibility for positive impact, is proactively looking for companies that reflect investors’ views. It is important to note that over the long run, there is no material difference in performance between socially screened and non-screened portfolios. Many rigorous academic studies back this up, Moran says.
For investors that are interested in an issue and wish to play a more active role in effectuating positive change, Moran can set up their investments so that they can take part in the proxy voting process of a company, attend annual meetings and even engage in dialogue with company leaders. This type of shareholder advocacy has led to big changes. For example, as a result of dialogue with social investors, Home Depot decided to move into sustainably sourced lumber and Nestlé agreed to set ambitious targets to move toward fair trade sourcing of their cocoa.
Another SRI approach is community investing. Moran says, “One of the primary goals of a lot of people I speak to is to be able to invest in things that are tangible to them—things that help their town and are real, as opposed to the sense that some people have when they invest in large companies—that it’s all on paper and they don’t get any sense of what they’re accomplishing.” A number of vehicles are available that serve as diversified funds and enable investors to keep some of their money closer to home, such as community development financial institutions, which provide capital to women and minority-owned businesses, micro-business startups, affordable housing projects and community nonprofits.
Moran is a certified financial planner and an accredited investment fiduciary. He offers free initial consultations and provides financial planning and investment services on a fee basis. For more information, call 518-450-1755 or visit SustainableWealthAdvisors.com.
Sandra Yeyati is a frequent contributor to Natural Awakenings.