Invest For Your Future and a Better World


If you want to make a corporation sit up and take notice, hit it where it hurts—in its profits.

Think about it: At the root of many corporate ills is a desire to maximize profits and shareholder returns. Abusive sweatshops? Created to squeeze every last dime out of the workforce. Environmental harm? Inflicted by companies that cut corners on manufacturing practices and want to avoid costly overhauls of manufacturing processes. Greenhouse gas emissions? The biggest emitter is the fossil-fuel industry, which earns more money the more carbon people burn.

The Rev. Dr. Martin Luther King, Jr. knew that money could be a driver for change when he called a boycott on the Montgomery, AL, public transit system as part of the battle for civil rights in 1955. That’s also why scores of people divested from companies doing business in South Africa during apartheid. Today, every single person has the power to pressure companies to improve their impacts on people and the Earth through socially responsible investing (SRI).

“Becoming an engaged shareholder is not only your right, but your responsibility,” says Andrew Behar, CEO of As You Sow , a nonprofit that promotes corporate responsibility through shareholder advocacy. “When shareholders speak in a unified voice, companies listen. It’s an incredibly powerful thing. We can create change in large corporations, because ultimately, it’s the people who own them that are stepping forth and saying, ‘I want to be engaged. I want to make this a better company, and I want to make the company fit into the whole greater system and greater society in a much more unified, conscious, and intentional way.”

Though we at Green America refer to the process of investing with your values as socially responsible investing, SRI is known by many names—natural investing; sustainable and responsible investment; impact investing; environmental, social, and governance (ESG) investing. Whatever you call it, SRI employs three powerful strategies that allow investors to use their economic power for good.

If you want to:

  • Get problematic industries like tobacco, fossil fuels, weapons, and others out of your portfolio.
  • Invest in forward-thinking companies on the cutting edge of green technologies, like renewable energy, water purification, and responsible waste management.

TRY: Screening

Screening for Impact

Screening is including or excluding stocks from investment portfolios or mutual funds, based on corporate conduct. It works in tandem with regular financial analysis.

Avoidance screens keep investments that violate your social or environmental criteria out of your portfolio—for example, tobacco or fossil-fuel companies.

Affirmative screens search out investments that support business practices in which you believe. You may want to invest in companies that are on the cutting edge of green energy or that help mitigate pollution, for example.

Screening has had a profound impact on the corporate world, ever since the first screens to remove tobacco, nuclear energy, and weapons companies from investor portfolios were deployed in the 1980s by SRI mutual fund pioneers like
Domini Social Investments, Calvert Investments, Parnassus Investments, Green Century Funds, and others.

Today, SRI financial advisors help clients screen their investments, including individual stock purchases, as well as mutual funds, exchange-traded funds, and other vehicles.
“When you screen your investments, moving your money into companies that are reducing their carbon pollution or use of toxic chemicals, for example, you help send a market signal that these are the kinds of companies that will enjoy investor and consumer support,” says Leslie Samuelrich, president of Green Century Funds.

There are many ways to screen your investments. If you’re so inclined, you may do the research and screen on your own.

Another easy option is to invest in the specialized SRI mutual funds and exchange-traded funds (ETFs), which have managers who screen fund portfolios for social and environmental responsibility. In addition, money managers for a variety of other investment vehicles—including annuities, hedge funds, closed-end funds, and real estate investment trusts all may screen for SRI factors.

Finally, a financial advisor can help you research high-quality social investments of all types.

Some mutual fund and ETF managers screen with an eye for overall responsibility. Other funds take special care to support certain industries. The New Alternatives Fund, for example, emphasizes clean-energy investments, while the Pax World Ellevate Global Women’s Index Fund invests in companies that “advance women’s leadership”.

Why might a mutual fund create a focused fund? Julie Gorte, senior vice-president for sustainable investing at Pax World, says of the Global Women’s fund: “Investing in women was something that [we are] passionate about. It’s also something that we have focused on for many years. Moreover, we are convinced that investing in companies that invest in women is a smart thing to do, in the same way that we think investing in companies that are more sustainable is simply a better and smarter way to invest. And the evidence bears that out: companies that use the talents of the entire workforce, not just the male half, tend to perform better.”

Gorte notes that a focused fund like the Global Women’s fund can still have broad market diversity. “This index fund includes companies from every region and every sector, including both developed and developing markets. It includes around 400+ companies around the globe based on their gender scores, [encompassing] women on boards, women in senior management, women CEOs and CFOs, and endorsement of the United Nations Women’s Empowerment Principles.”

Perhaps the biggest impact that investment screening has had is that it has led to greatly increased scrutiny of corporate social responsibility records.

As a 2013 US SIF report called “The Impact of Sustainable and Responsible Investing” states: “Increased demand by investors for more extensive and comparable ESG data from companies has in turn galvanized ... a growing number of publicly traded companies and private equity firms [to] look at environmental, social, and governance issues in a more formal way as part of their decision-making. Some companies are disclosing their environmental and social performance in the same way as they report their financial performance.”

How Abi Greened Her Investments
(and Enjoyed Competitive Returns)

Abi Rome has been screening her investments since the 1990s, with the help of financial advisor Richard Torgerson, including divesting completely from fossil fuels.

Abi Rome has been screening her investments since the 1990s, with the help of financial advisor Richard Torgerson, including divesting completely from fossil fuels.

Abi Rome
Silver Spring, MD


Abi Rome’s love to nature as a young girl led her to study biology in college, and then focus on ecology and conservation for her post-graduate work. So in the late 1980s, when it came time to manage an inheritance she’d received, she wanted to make sure her investments were benefiting the planet, not harming it.

“I was concerned about the impacts of big business on the environment and on social justice, so when I learned about the SRI [socially responsible investing] movement, it seemed natural for me,” says Rome.

She looked for for a financial advisor who used SRI criteria and found Richard Torgerson, with whom she continues to work to this day.

She began by asking Torgerson to screen her investments—some of which came to her as stock shares in oil, gas, and tobacco companies—for social and environmental responsibility.

“The thinking at the time was that you couldn’t do that well if you’re only going to invest in certain sectors or leave out other sectors,” recalls Rome. “But that didn’t stop me. I made the decision that I wanted to be clean with my money.”

Doing so has worked out just fine for Rome for more than 25 years. Today, she invests in SRI mutual funds and Calvert Foundation’s Community Investment Notes®. And she works closely with Torgerson to create a portfolio of individual stocks carefully screened for social and environmental criteria.

She also recently asked Torgerson to help her divest from fossil fuels (see p. S) and was surprised and proud to find that her portfolio “was already, and had been for years, free of fossil-fuel companies.”

Rome has been very pleased with both the financial and social performance of her investments for the past quarter century. “My portfolio outperforms the S&P when the stock market does well, and during crashes, it has not lost as much as the overall market,” she says.

All investment involves a certain amount of risk. But Rome’s portfolio has demonstrated that over a period of time, SRI investments can match and even outperform conventional investments.

—Sarah Tarver-Wahlquist


If you want to:

  • Use your investor power to pressure irresponsible corporations to clean up their acts.

TRY: Shareholder Activism

Shareholder Activists Take on Company CEOs

Shareholder Action/Advocacy describes the actions many investors take—using their status as part-owners of corporations as leverage—to press corporations to improve their social and environmental practices.

“Corporations are very conscious of the value of their brands, or what is called intangible value,” says Gorte. “Today, 75-80 percent of the value of many corporations—particularly large ones—is intangible. What that means is that if investors lose confidence in the company for any reason, its market value could crash quite considerably, and that in turn can turn a company into shark bait, vulnerable to takeovers.”

Adds Fran Teplitz, Green America’s executive co-director, “SRI mutual funds and institutional investors acting in coalition have millions of dollars invested in the corporations they engage, so managers take notice when they approach.”
Shareholder activists often start by meeting with management to dialogue on social and environmental concerns.

Companies will often respond quite rapidly to shareholder requests for dialogue, because they “don’t want to be perceived as being callous to environmental or social issues,” says Jonas Kron, senior vice-president of shareholder advocacy at Trillium Asset Management.

Kron says Trillium often sees companies agreeing to make a change during those dialogues. If the company doesn’t agree, shareholders like Trillium may file a shareholder resolution to get its attention and escalate the process.

Shareholder resolutions are requests to corporate management for changes in company policy or procedure. A resolution appears on a proxy ballot that is sent to all shareholders by mail each year, and votes are taken at a company’s annual meeting.

Even low votes of ten percent or less can add up to big change, because they can signal a potential bad-publicity storm on the horizon.

In 2013, As You Sow filed a resolution with General Mills asking it to remove genetically modified organisms (GMOs) from Cheerios—in tandem with Green America’s GMO Inside campaign, which mobilized consumers to raise their voices against GMOs in Cheerios. 2.2 percent of all General Mills shareholders voted in support of the resolution. As a result of this combined consumer and shareholder pressure, General Mills reformulated Cheerios without GMOs in January 2014.

For companies that are slower to take action, votes of three percent the first year, six the second, and ten percent thereafter are enough to put a resolution back on the proxy ballot the next year, so the negative publicity these resolutions generate keeps coming back to haunt them.

“Through resolution-filing and ongoing long term engagements, shareholders can improve performance in a range of issues critical to the planet and its people—climate change, human rights, labor rights and working conditions,” says David Schilling of the Interfaith Center on Corporate Responsibility, a shareholder advocacy nonprofit.

If dialogues or repeated shareholder resolutions don’t get results, shareholder activists may call for divestment, asking people to remove a certain type of stock from their portfolios. Mass divestment from companies doing business with South Africa during the apartheid years helped topple this oppressive form of government-sanctioned racism.
Today, shareholders hope to do the same by divesting from the fossil-fuel industry, to pressure it to move away from climate-changing fossil fuels and toward green

If you want to:

  • Put your money to work helping low-income people around the world lift themselves up economically.
  • Move your money away from predatory mega-banks tied to the foreclosure crisis, and toward institutions that are doing good.
  • Support banks and credit unions that prioritize loans to green companies

TRY: Community Investing

Community Investments: Maximizing Social Impact

Community Investing vehicles—which can be as basic as a savings or checking account in a community investing bank or credit union—maximize the social impact of your investments, providing capital to low-income people in the US and abroad who are underserved by conventional banks.

What does it mean to be underserved by banks? It means you’re a member of a population for whom it is exceedingly difficult to obtain fair loans and financial services.

Without access to capital from banks, it’s nearly impossible to buy a home, send a child to college, or start a business—to improve your life and achieve a piece of the American dream.

Underserved populations often fall victim to predatory lenders, which include well-known mega-banks among their ranks. In 2012, Wells Fargo agreed to settle with federal regulators to the tune of $175 million in the face of accusations that it steered black and Latino borrowers into high-cost loans and charged them excessive fees. Overall, African Americans and Latinos are 30 percent more likely to receive high-rate subprime loans compared with white borrowers, a fact that a 2012 study from Howard University and City University of New York estimates cost these populations about $570 billion between 2006 and 2012.

Community development financial institutions (CDFIs) like Hope Credit Union (m), which has branches throughout the mid-South, have been stepping in to fill the fairness gap, making it a key part of their mandate to help people lift themselves up economically.
“You have a country that is becoming more and more diverse, and too often, people of color, or people in rural areas, or people whom banks have not had a great history of serving are left on the outside looking in,” says Bill Bynum, CEO of Hope Credit Union. “It’s critical to the country and the economy to find a way to help all individuals succeed, and to make sure they have financial tools that are responsibly structured and affordable—and no one does that better than CDFIs.”

Bynum points out that since the economic recession started in 2008, a record number of banks have closed across the country, with 93 percent of those closures occurring in low-income areas that need them most, according to a 2013 Bloomberg study. In contrast, Hope and other CDFIs work hard to ensure that as many people as possible continue to have access to capital.

“Rather than leaving people to rely on petty lenders and check cashers that charge very high rates and fees, we’ve probably gone from five to 17 branches since the recession started,” says Bynum. “86 percent of our business loans are in economically distressed communities. Almost 90 percent of our mortgages are to first-time home buyers at a time when many financial institutions are pulling away from providing mortgages, particularly to the markets we serve. Our average home buyer has a household income less than $40,000. If organizations like Hope don’t step in and fill those gaps, a lot of people are going to be shut out of economic opportunity.”
CDFIs also go the extra mile to ensure their loans succeed, providing financial and business counseling and technical assistance to borrowers. And they often take special care to support sustainable, local businesses.

You can help these banks and credit unions, whose social-impact bottom lines are as important to them as their financial bottom lines, simply by breaking up with your
mega-bank and opening accounts with a CDFI.

Make a Difference with Your Money

Together, the three strategies that make up SRI are powerful drivers of economic change. While engaging in screening and shareholder advocacy means you may be invested in possibly irresponsible companies, these strategies help reduce the damage those corporations are inflicting, pressuring them to improve.

And community investing expands the social impact of your investments, paving the way for equal access to fair financial services for all.

“Where people put their money makes a difference, whether it’s going toward something that’s going to lift people up or be a detriment to their lives,” says Bynum.

—Tracy Fernandez Rysavy,
with additional research by Andre Floyd


Does Social Investing Affect Performance?

You may be convinced by now that SRI does make a difference in the world, but perhaps you’re wondering what kind of difference it will make in your portfolio. Will you sacrifice financial returns if you align your savings and investments with your values? The evidence, amassed through hundreds of studies, shows that historically, SRI indexes have performed as well as or better than their conventional counterparts. For example, in a white paper published in 2014, TIAA-CREF selected five widely known US equity SRI indexes with track records of at least ten years—Calvert Social Index, Dow Jones Sustainability US Index (DJSI US), FTSE4Good US Index, MSCI KLD 400 Social Index, and MSCI USA IMI ESG Index—and compared their returns with two conventional US equity-based indexes, the Russell 3000 and the S&P 500. The analysis found that the SRI indexes performed competitively with the conventional indexes. Likewise, a 2015 survey by the Morgan Stanley Institute for Sustainable Investing found that, “Benchmark performance of the MSCI KLD 400 Social Index, which includes firms meeting high Environmental, Social, and Governance (ESG) standards, has outperformed the S&P 500 on an annualized basis by 45 basis points since its inception” in 1990. And a 2012 meta-analysis of over 100 academic studies, conducted by DB Climate Change Advisors, found that incorporating SRI results in “superior risk-adjusted returns for investors.” Conclusion: You can do well by doing good with SRI.

This graph from the Morgan Stanley Institute for Sustainable Investing shows how the MSCI KLD 400, the world’s oldest socially responsible investment index, has outperformed the S&P 500 since its inception.



Summer 2015.

(m) Designates a certified member of Green America’s Green Business Network®

From Green American Magazine Issue