OPINION | Demanding a social return on your investments


Three years of turmoil has led many of us to re-assess our financial lives and take concrete steps to decrease debt and increase savings.  The overall theme is one of sustainability – basically trying to live within our means (perhaps “right-sizing” our current lifestyles) while also investing appropriately for the future. This trend is encouraging in many ways, reflecting an ethic of personal responsibility and desire for change that is a more effective response to the financial crisis than most other actions we can take.

When it comes to investing, vote with your dollars for the businesses you want to support

The next level of this sustainable approach to our personal finances focuses on how we choose to spend and invest the money we have.  The average American wields a significant, powerful tool to enable the type of social change they are seeking – their money.  Every dollar we spend or invest is going out into the world to do something, to enable some company somewhere to create a product or deliver a service through whatever means they deem appropriate and profitable.  When we spend money on a given company’s products, we are casting a vote for that company and its business practices while voting against its competitors.

All of us make decisions every day about the sort of food, clothes, cleaning products and other items we choose to use in our homes.  In recent years, many more of us are choosing to eat organic and/or locally grown food.  Our choice probably has as much to do with the environmental and social impact of the food’s production as it does with the product itself and the price we pay for it.  We no longer simply seek a product for the lowest possible price (organics are not cheap) because we understand the environmental and social cost of focusing only on price. 

So – isn’t it time we apply this same level of enlightened thinking to our investments?  Isn’t it time we started to care about how the returns are being generated vs only how much?        

As we have all learned at a different and more painful level in recent years, a given company’s myopic pursuit of profits can lead them to ignore the impact of their activities on the greater economy and on society.  This type of corporate behavior is not just confined to Wall Street and the financial industry.  In fact, it permeates all areas of the private sector because most companies operate within a system that rewards short-term results regardless of the long-term impact to our planet, and our neighbors.   Recently MSN Money quoted several CEO’s in an article entitled “Why CEO’s can’t stand Obama.”  

T.J. Rodgers of Cypress Semiconductor, reacted to President Obama’s criticism of the leaders at the big banks as well as other companies who are stockpiling cash instead of hiring. “Obama uses political rhetoric to demean me and my motives, but the fact is, I am completely happy with my motives and the morality of my decisions,” Rodgers said. “My moral responsibility is to protect and grow the investment of shareholders.” *

What an extraordinary and absurd statement from a business leader – basically implying that the act of creating profits for a company’s shareholders is inherently a moral act.  Apparently Mr. Rodgers has not learned the lesson that the rest of us have – that there is a right way and a wrong way to create shareholder value.  Anyone can create profits.  The question is whether they were created within a business plan and corporate culture that values ethics, transparency, environmental stewardship, and fair labor practices.

Thankfully, all of us have more options than ever to invest in companies with sustainable business models.  In this area of “socially responsible investing” there are more mutual funds and other investment vehicles available today than in previous years because more investors are demanding this sort of approach.  Whether you are a do-it-yourself investor or someone who works better with a trusted advisor, there are many resources to help you navigate your choices and to better align your personal mission with your money.

Tips for Socially Responsible Investing (SRI)

  1. Review your company’s retirement plan – do you have SRI options?  If not, ask your plan administrator to add them.   
  2. If you manage your own money, look for the filters that allow you to screen for SRI funds on your online brokerage website, and/or check out these websites:
  3. Invest locally – use your local community bank or credit union when possible.  Find out if they have investment professionals who specialize in SRI.
  4. Create or join an investment club that does its own SRI research. 
  5. Hire an investment professional who specializes in SRI. 


* Brush, Michael, “Why CEOs Can’t Stand Obama”; MSN Money, September 21st, 2010