Most of us have heard the term Socially Responsible Investing, or SRI. It’s a concept that sounds good, but it’s not always well understood. Not to mention, SRI – and variations thereof – can mean different things to different people.
“We prefer the term Sustainable, Responsible, Impact Investing,” says Betsy Moszeter – Senior Vice President, First Affirmative Financial Network – who oversees The Community Foundation’s socially screened investments. “About 10 years ago, the term started to change when socially responsible investments increasingly meant being good stewards of the land. Who cares if a company is profitable today if our world as we know it won’t exist in 20 years because we’ve ruined the environment?”
Five years ago – when The Community Foundation first ventured into SRI – First Affirmative was selected via a competitive RFP process. “We wanted to dip a toe in the water with 10% of our investments in companies that are good citizens, care about the environment, create jobs and value peace,” explains Margaret Katz, the foundation’s Director of Philanthropic Services. “We wanted to see what their performance would be, and whether we could come up with a screen that would fit most people.”
According to its Investment Policy Statement, The Community Foundation’s socially conscious investment pool incorporates a broad range of social screening criteria aligned with the foundation’s mission – including “investments in enterprises that practice good governance, contribute to a clean, healthy environment, treat people fairly, embrace equal opportunity, produce safe and useful products, and support efforts to promote world peace.”
“The most traditional screens ensure holdings that exclude anything to do with tobacco, firearms – and now, fossil fuels,” Katz continues. “Each of these screens leads to a different set of holdings. But instead of a negative screen, we came up with a positive screen. Instead of focusing on what we don’t want, we’re focusing on what we do want to see more of – like citizenship and environmental stewardship. And the returns have been really respectable.”
While, historically, socially screened portfolios are more likely associated with risk opposite comparable, unscreened portfolios, the performance of any investment being managed through The Community Foundation’s socially conscious screening criteria is expected to result in a competitive return.
“It’s what we do best,” says Moszeter. “Sustainable, Responsible, Impact Investing has been our bread and butter for 26 years. It’s our job to make sure that every dollar has an impact.”
Adds Katz: “In Boulder County, many of us are motivated to vote with our dollars and to mindfully support only businesses and companies that pass the sniff test. But socially conscious investing used to imply underperforming portfolios – that’s no longer the case.
“It used to be that the only choice we offered our donors was a 90/10 split, with 10% of funds in socially conscious investments. But earlier this year, we added the option of a donor-advised fund comprising 100% socially conscious investments. There are more and more companies out there that really value character and culture – they’re finding that being socially responsible is good business.”
And that’s a ‘win’ for all of us.
