All Entries in the "Socially Responsible Investing Series" Category

Socially Responsible Investing: Part 2- Mutual Funds: Know What You Own

Calvert Group is an investment company that has specialized in socially responsible investing (SRI) since its inception over 30 years ago. They also provide a free, on-line “Know What You Own” screening software for over 1000 mutual funds.

Now you can evaluate the available funds in your 401K to see where they fall in the SRI spectrum.

If you’re lucky enough to find your fund on the list, you’ll be rewarded with an in depth screening of each of the fund’s stock holdings for thirteen SRI criteria. These criteria are alcohol, animal welfare, corporate governance, communal relations, environment, gambling, human rights, indigenous people rights, product safety and impact, Sudan, tobacco, and worker’s safety.

There’s also a list of the top ten holdings in each fund, so you can see some of the stocks that do meet the Calvert criteria.

Using this tool, I was able to screen 95% of my retirement funds.

Here’s a summary of my results:

Now I have the information I need to make better decisions about my investments. My next step is to evaluate all of my portfolio options, and see if I can be happy with what is available.

I’d be curious to know if anyone has found any similar screening tools.

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Socially Responsible Investing: Part I- Where Do I Begin?

I’ve been thinking about converting at least part of my 401k to socially responsible investments (SRI) for a while. But where do I begin? How do I go about finding the best investments for me? Can I also do it with my very small non-401k portfolio?

In this series, I hope to answer these questions. I’m also hoping to hear from you readers. How are you approaching this? Is anyone else out there feeling as guilty as I am that they haven’t done this already?

Here’s my progress so far:

Initially, I had to get over a few roadblocks:
My 401K currently doesn’t offer SRI funds.
Solution: I can divert my non-company matched contributions to alternate retirement vehicles.

I’m 49 years old, and hope to retire in this lifetime. Is that possible with SRI? I’ve heard their performance is lower and their fees are higher.
Solution: I’m hoping compromise won’t be necessary as the world becomes more socially and environmentally conscious. But I am nervous. I realize I’m extremely hesitant to compromise a comfortable retirement. I’ll be quite cautious as I make my portfolio conversion. I’ve also made an appointment with a financial planner for the end of March. I want to have all my ducks in a row. I only get one shot at saving for retirement. And my clock is ticking.

Once I got over these hurdles, I started implementing my plan:

1) I’ve started a list of social and environmental issues that are important to me. Here’s my list so far:

Environmental

Global warming

Protection of open space

Sustainable environmental practice

Social

Fair Trade

Fair Labor Policy

Support of liberal social positions such as social diversity and government supported medical care

Healthy global economics and development

Community investing

World peace

Animal rights

Depending on what prospective investments I come across, I may add to this list.

2) Determine just how socially and/or environmentally responsible the company needs to be to meet my criteria.For example, Microsoft is considered a “Green” stock by many SRI mutual funds. It is green not for what it produces, but because it practices business in an environmentally responsible manner.

After much thought, I decided to do this aspect of the analysis on a case by case basis. For example, I might be able to let some things go if a company has made recent strides in the right direction.

3) Do research.

This is my next step. I’ve tracked down some research tools I’ll use in my screening process.

Tools
Social Investment Forum.
Social Funds
Co-op America
CDFI- Coalition of Community Development Financial Institutions
Calvert Group

Other Reading
Green Money Journal
Top Five Social Investing News Articles of 2007
PRI- Principles for Responsible Investment


Stay tuned for Part II of this series. I’ll report back on what I’ve found out from my screening research. I’ll also discuss how I’ll incorporate these SRI stocks/ETFs into Jason Kelly’s worksheet for choosing healthy stocks. For an introduction to the worksheet, see my eighth installment of the “Beginning Investments 101” series. It will be out next week.

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