Investing in a Better World

By Amanda N. Wegner

In a world where money talks, investing in companies and organizations helping to make the world a better place can have a powerful impact. Enter socially responsible investing, or SRI.

SRI is a type of investing that goes beyond traditional financial considerations, allowing individuals to invest in companies that prioritize ethical, environmental and social responsibilities, or, investing profits for positive social impact.

“Socially responsible investing adopts an exclusionary strategy, selectively avoiding companies based on specific criteria aligned with ethical principles,” says Christine Sperry, CFP®, a Certified Financial PlannerTM and trust officer at Lake Ridge Bank. This type of investing reflects “the growing trend of investors seeking to align their finan- cial goals with environmental and social considerations that they find to be important.”

SRI may encompass investing in a Certified B Corporation (or B Corp for short), a for-profit company that has volun- tarily met high social and environmental standards. One such publicly traded B Corp is eyewear company Warby Parker, which has distributed more than 10 million pairs of eyeglasses to people in need.

SRI investing is an opportunity to make investments that reflect your values. If you care for the environment, you might invest in a publicly traded wind or solar company. If you care about supporting the advancement of women, people of color and other marginalized groups, you might invest in companies run by such individuals. There are also exchange-traded funds (ETFs) and mutual funds available that specifically target sustainable investing.

Yet another SRI opportunity is community investing, where your invested dollars support community organizations seeking funds to affect positive change. For instance, Madison-based Forward Community Investments converts community investments into low-interest loans for high- impact community projects in Wisconsin. As the initial loan is repaid, the money and its interest are recycled into loans for other organizations, and investors earn a financial return on their investment.

Sperry says that the advantage of SRI is the ability to create a deep, meaningful connection between investors and their investment portfolios.

“SRI investments specifically target companies dedicated to making positive contributions to the environment and society, thus creating a positive cycle of beneficial effects,” says Sperry. “For instance, clients who invest in SRIs feel good knowing that their investments are helping to create positive change for causes they are passionate about and companies can continue their work in making those positive changes a reality.”

Despite their socially responsible nature, Sperry cautions that, as with all investments, risk is involved, and investors need to research the SRI companies or funds they wish to invest in. Here are some questions to consider:

  • What is the company’s or fund’s definition of social responsibility?
  • Does the company’s or fund’s definition of social responsibility align with your beliefs?
  • Is the company or fund transparent in its operations and decision- making processes?
  • What is the track record of the company or fund in terms of social responsibility and financial performance?

SRI investing is not one-and-done; it is essential to continue monitoring and researching your investments.

“Staying up on current news with the SRI company or companies you are invested in helps maintain a consistent alignment between the investment and your values and goals,” says Sperry.

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