Broker Check

Socially Responsible Investing

| May 01, 2017

Socially Responsible Investing, also known as SRI, has been around for decades, but is only recently gaining in popularity.  I myself became very interested in this area after my wife wanted to know what we were investing in for our retirement, and we are now active in this type of investing ourselves.   I have found that while there are many SRI options available, they are not easy to find and can be even harder to understand.  It is my hope that this will serve as an introduction and generate some thought into what you may or may not want to personally invest in. 


As you can see, there are many areas to take into consideration.  Many funds will offer different levels of investing in certain areas as well.  For example, a fund may not eliminate alcohol companies completely, but will try to keep them to a minimum, while trying to maintain a level of diversification for positive returns.  An example of this would be to limit the percentage of the alcohol related companies to less than 5% of the portfolio.  SRI funds will look at certain areas known as ESG.  They are EnvironmentalSocial, an> Governance.

When looking at the environmental aspect, you can focus on companies that have a positive long term effect on the environment.  For example, Coca Cola has recently started a Water Stewardship program to reduce the amount of water used and to recycle waste water.  They are working to become water neutral in the next several years.

 Social issues can cover many areas, but you can look for companies that don’t take advantage of abusive labor laws and practices around the world.  You may not be comfortable investing in a company that makes more money for the shareholder by making employees work for below minimum wage or in substandard working conditions. 

Finally, governance looks at companies that allow their shareholders and board members to truly have a voice in how the company is run.  It allows those individuals to speak up and make sure the leadership is held accountable for their actions.

Socially Responsible Investing can even get into deeper issues such as funds based on religious preference, and funds that invest in companies that take into consideration women’s rights and equal pay in the workforce.  As this specialized field on investing continues to grow, so will the options available for individuals who truly want a say in how their money is invested.  You may not be able to take on those companies you feel are working against your beliefs directly, but you can make a difference by making a choice to not give them your money.

William O’Donnell is a retired 20-year veteran of the U.S. Air Force and U.S. Army.  He has a Master’s Degree in Financial Planning and Counseling.  He resides in Rochester, NY with his wife and son.

Serving clients in upstate New York and 10 other states.




Cell Phone: 585-754-3948