Responsible Investing Your own views should be paramount in deciding what is socially responsible in your portfolio. Peter Kinder, one of the founders of the Domini 400 Index, offered this definition thirty years ago of what was then called social investing: Social Investing is the “Incorporation of ethical considerations in the investment decision-making process”. Responsible investing is acting on the recognition that it matters how and in what you invest. Money is power. An investment in any business endeavor has a real impact in the world. Therefore, your investment decisions have consequences. And, as such, our investment decisions carry the same moral and ethical considerations that guide us daily in all other parts of our lives. Responsible investors choose not to participate in morally or socially irresponsible activities and choose to emphasize morally and socially responsible endeavors. SRI Versus ESG In contrast, the now-popular “ESG Investing”(ESG) implemented by Wall Street firms can turn socially responsible investing (SRI) on its head. Wall Street generally adheres to a worldview of shareholder capitalism, as expressed by economist Milton Friedman when he famously declared "there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits”.[i] Equating profits with social responsibility, the only importance of environmental, social or governance concerns is their direct impact to corporate profits. If socially concerned responsible investors are concerned with how our investments impact the world, ESG investing is concerned with “whether the world might mess with the bottom line”[ii]. In just one example cited by a recent Bloomberg article, the fact that fast food companies have enormous carbon emission footprints matters literally nothing to the environmental ratings generated by the leading ESG research house. (This firm’s ratings informs the investments of some 60% of the “ESG” labeled investment products out there.) The reason is that no emissions regulator will enforce any actions on fast food companies, so there is no perceived risk to fast food companies on this issue. No consideration is given to the risk imposed on the world by fast food industrial emissions.[iii][i] Friedman, Milton. “A Friedman Doctrine‐- The Social Responsibility Of Business Is to Increase Its Profits.” The New York Times, The New York Times, 13 Sept. 1970, www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html.[ii] Simpson, C., Rathi, A., Kishan, S. (2021, December 10). The ESG Mirage. Bloomberg.com. Retrieved December 30, 2021, from https://www.bloomberg.com/graphics/2021-what-is-esg-investing-msci-ratings-focus-on-corporate-bottom-line/[iii] Ibid. It Matters How You Invest. Every investment has real impact, not just ones marketed as “impact investments”.Equities (Stocks) When an investor buys an equity security (stock) in an enterprise, that investor becomes a part owner of that enterprise. As such the shareowner assumes a responsibility for the actions of the enterprise and their considerable effects that enterprise has on all stakeholders of that enterprise – customers, employees, suppliers, affected communities and the shareowners. The price paid for a stock is typically determined by the balance of trades in the open market, and prices can go down or up. The decision to buy a stock can affect the price of that stock.Even a small change in stock price has a magnified impact on that company’s overall value, its ability to transact business, borrow money, and acquire other companies. A small change in stock price can add millions to executive compensation and influence the CEO’s job security.Fixed Income (Bonds, Notes and CDs) When an investor buys a fixed income security, the investor becomes a lender of cash to the enterprise. Often that cash is critical to the enterprise’s ability to conduct their business and fulfill their mission. The lender assumes a responsibility for how that cash is put to use. You Define What Is Socially Responsible. SharePower® advisors take the position that your views should be paramount in deciding what is socially responsible in your portfolio. We employ a comprehensive social issues questionnaire to help you define your social and ethical instructions. SharePower advisors utilize the United Nations Global Compact and the Sustainable Development Goals to help us implement those instructions. Research & Screening Our research seeks to analyze the corporation’s actions and their impact on the stakeholders of that enterprise – customers, employees, suppliers, affected communities, shareowners, lenders and the planet itself. Screening seeks to emphasize those companies with a positive impact and exclude companies with a negative impact in your investment portfolio. Since all investments have impact, this research and screening process is applied to all asset classes in your portfolio: stocks, bonds, and cash. Shareowner Advocacy Shareowner advocacy leverages ownership in companies to influence the behavior of those companies either through (1) direct dialogues with companies, (2) filing of proxy resolutions to appear on companies’ annual shareowner meeting ballots, and most often, (3) through informed exercising of shareowner voting rights in annual meetings. Community Investing Community investing is a subset of portfolio decision making that involves directing investment towards community, non-profit or charitable programs to help disadvantaged communities that lack access to traditional financial markets grow and thrive. Philanthropic Planning Owning an investment portfolio offers many advantageous ways to accomplish your charitable giving beyond just donating money. Donating highly appreciated securities and/or donating directly from your IRA through Qualified Charitable Distributions may offer distinct tax advantages. (We recommend discussing the tax consequences of your charitable giving plans with your tax advisor.) Through the Cambridge Charitable Gift Fund, you can establish your own Donor-Advised Fund to manage larger or multiple donations of your choice. The custodians we work with also can establish Charitable Remainder Trust accounts for even larger or more complex philanthropic programs. (We recommend discussing the advisability of a Charitable Remainder Trust, or any type of trust, with your estate attorney.) Public Advocacy Investors often have an amplified voice in public affairs, especially when coalitions of like minded investors band together to advocate social progress. SharePower often takes part in important campaigns that affect social and financial progress. We summarize those efforts in our latest United Nations Global Compact Communication On Progress Report. Access Report Responsible Investing Social justice and environmental stewardship are two of the three objects of focus for SRI. The third comprises the needs and objectives of the investor. For, just as employees, customers, suppliers, society and the earth itself can be considered important stakeholders affected by corporate behavior, so too are the shareowners and bondholders of the enterprise as well. Many faith traditions speak of these three worlds – the individual, society and the environment. In just one example, some branches of Buddhism speak of Ichinen Sanzen, a concept encompassing all the various perspectives of reality from the standpoint of the individual self, the society of humankind and the natural environment or planet itself. In this formulation, wisdom is not complete if any perspective is left out.That makes a good model for how we look at investments. If an investment in a security or enterprise is beneficial to society, healthy for the planet, and contributes to the financial needs and objectives of the investor, then it can be considered a socially responsible investment. Compromise in any one of the three areas and that investment falls short. A financially promising investment that is beneficial to society but harmful to the environment falls short. So does an inappropriately risky investment despite promising social or environmental benefits. We feel that combining socially responsible investing with a laser focus on your own financial needs and objectives, well, that’s just the responsible thing to do. This is why we simply call what we do Responsible Investing. Our Global Compact Report Access our latest Communication On Progress Report to the United Nations Access Report Your Values Survey What does 'socially responsible' mean to you? Take our survey to start the conversation. Complete Your Survey UN Global Compact Learn about the UN Global Compact and the Sustainable Development Goals Learn more Have a Question? Name Email Address Phone Question Thank you! Oops!