Today more and more investors are putting their money where their morals are.
Socially responsible investing (SRI) is on the rise, buoyed by a growing sense of disillusionment with Wall Street greed. But there’s a lot of questionable information out there about SRI. If you Google around a little, you’ll notice a slew of articles claiming it’s less profitable and harder to deal with. Detractors argue that social responsibility is difficult to measure, define, and control, and you’d be better off sticking to traditional funds.
But here’s what the Wall Street big hitters don’t want you to know: SRI has never been easier — or more profitable.
Here’s something most people know, but don’t want to say out loud:
Wall Street is just a bunch of old white guys running the clock on their careers playing golf.
They’re out of touch and have a vested interest in keeping things the way they are. After all, their pride and careers are at stake. That’s why so much of the information on SRI is intentionally misleading — it threatens the status quo.
In reality, you have nothing to lose by investing smartly and ethically, and everything to gain.
Here’s why it’s time to get on board:
1. Socially responsible investments are outperforming traditional stock market funds.
There’s a common misconception that if you want to invest responsibly, you’ll pay the price in lower performance.
But statistics show that SRI funds are performing at least well, if not better than, traditional investment vehicles. In addition, investing ethically is a way to support worthwhile causes, like sustainable agriculture or social equality, all of which can help make the world a better place.
Financial analysts have started to calculate corporate social responsibility against various financial parameters, and are realizing that companies that prioritize socially responsible investments actually outperform their peers in the marketplace. (Who knew?) And on top of that, their employees and customers both felt happier about their involvement with the company.
Growth of sustainable assets in the U.S., meanwhile, is up over 200% from the past decade. That means an increasing share of investors are demanding that their money be used to make a positive impact on the world. You don’t have to do a deal with the devil in order to make money. And you don’t have to pay some “premium” to do the right thing.
The writing is on the wall.
2. It’s easy to invest responsibly.
You know when a doctor or lawyer uses a ton of professional jargon to reinforce the idea that he’s in charge, and so you can’t challenge him? They do the same thing on Wall Street. These finance guys don’t want you to have a handle on your money. They’d rather keep you reliant on their supposed expertise.
I work with a company called Swell Investing, which requires a minimum investment of just $50 to start participating in socially responsible stocks, such as energy, clean water, and healthy living. It’s online, it’s cool, it’s sexy, and most of all, it’s easy. You can choose the causes that are most important to you, like gender equality or racial diversity.
When you see how easy some of these platforms are, you’ll quickly realize how the entire financial services industry is a sham. It’s built on relying on fiduciaries, who are more focused on their commission than on your best interests. And they certainly aren’t concerned about the planet.
At the end of the day, the power is in your hands, not theirs.
3. Impact investing is investing in the future we want to see.
As America’s political divide deepens, a lot of people are feeling motivated to enact change — not just with their vote, but with their dollars, too.
The traditional finance world is still stuck in a paradigm where worth is measured based on quarterly returns. These guys are like house flippers. They buy a run-down house, plug up the leaky roof, and just dump it on the next chump. But if you’re playing the long game, you’ve got to make sustainable decisions. You have to fix the roof so the house can be enjoyed for decades to come.
SRI is a great way to make a difference and shape the course of the world.
Personally, I like to invest in companies that support regenerative agriculture. I’m dedicated to fostering tree canopy growth because that’s the primary way to sequester carbon. So I support companies that help preserve the rainforest and divest in companies like McDonald’s and Burger King that chop down trees. I’m invested in my kid’s future and want there to be a livable planet for him.
If the environment isn’t your primary concern, you can find something that appeals to you. If you’re against war, invest in companies that don’t support the war industry. You have to do some research to find out whether your money is going somewhere aligned with your values.
Remember that ethical investing is all about the long-term.
In conclusion: the individual consumer is more powerful than you think.
The biggest hurdle right now to SRI is getting people to overcome their preconceived notions of what investing looks like.
A lot of people have this idea that business is inherently dark and dirty. They think supporting shady practices is the only way to make a buck, so they invest in sin stocks like firearms, tobacco, or gambling. As the saying goes, if you can’t beat ’em, join ‘em.
But the individual consumer has no idea how much power he really has.
In the 60s, hippies began spending more on organic produce because they knew it was better for them. To this end, they subsidized the growth of the industry to the point where organic food is now only marginally more expensive than conventional. By demonstrating their values with their dollars, they were able to transform the entire industry.
Every dollar spent at a store is a vote for that company’s values. And capital moves mountains. Now, there are roughly six billion dollars in impact funds readily available — a number that’s tripled in recent years and will likely triple again in the near future.
It’s still a drop in the bucket in the trillions that are being moved around Goldman Sachs, but you’ve got to start somewhere.
The numbers are in — if you want to make and change, vote with your dollars and invest responsibly. When there’s still a cleaner and more peaceful planet around in 50 years, you’ll be happy you did.