Socially Responsible Investing is Good for Your Portfolio

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This is an update to a blog post I wrote for a financial advisor on the benefits of using SRI when evaluating investment decisions.

Socially Responsible Investing is Good for Your Portfolio as well as your Conscience

Financial advisors offering socially responsible financial advice often hear comments like “Socially responsible investing is all well and good, but I need to make sure I maximize my earnings... Now.”

This response is unfortunate because one of the best ways to maximize investments is by investing with socially responsible principles in mind.

In fact, a 2015 study conducted by the Carleton Centre for Community Innovation stated that:

The traditional investment approach argues that SRI limits the investment universe and results in a decrease in value. But this view is not backed up by empirical evidence… most studies show that SRI funds deliver comparable and, in some cases, superior returns to those of traditional funds.

SRI works as a solid investment strategy. Period.

Making investment decisions based on SRI is not about “or” – I can invest ethically or I can make money. It is about “and”. I can invest money ethically and I can make money on those investments.

In fact, you increase your returns and your security by investing in SRI related funds. Sort of like having your cake and eating it too.

SRI finds the best things to invest in - all round

Think about it. Corporate success relies on many factors. Ultimately, both financial and social perspectives play a role in determining a company’s long-term success and its bottom line.

While short term success may come from following fast and loose practices you should remember that you are investing for the long term.

By seeking out companies with a proven record as good corporate citizens you can minimize the likelihood that a centerpiece of your investment portfolio ends up on the front page of the newspaper with a story reflecting a lapse in corporate judgment.

In-depth reviews of corporate practices will help you to find the gems that will grow steadily into the future. And good solid SRI studies do that for you.

SRI does not ignore sound financial principles. It adds to them. And your portfolio is stronger for it.

The numbers prove it – SRI improves your chances and your return

The Carleton study, published in 2015, pointed out that the SRI sector was already seeing significant growth. That growth has only increased since then.

In February in a report titled Sustainable Fund U.S. Landscape Report, Morningstar pointed out that:

Sustainable funds attracted a record $51.1 billion in net flows in 2020, more than twice the previous record set in 2019. Sustainable fund flows accounted for nearly one fourth of overall flows into funds in the U.S.

Join the party – become an SRI investor today

So come on. Let’s work together to make the world a better place while securing your financial future. Make it happen today. You’ll be happy you did. On so many levels.

2022