Socially Responsible Investing: Your Money, Your Values

If you’re like most overworked, multi-tasking mothers and wives, you try to make lifestyle choices that reflect your values.

You feed your kids high-quality food. You work for an organization you believe in. You recycle and do your part to reduce your carbon footprint. So, why would you put your money into a mutual fund or 401(k) without knowing how that money is being invested?

Invest in what you believe in
“So many people forget you can exercise your values through your investing as well,” says Sue Stevens, a Deerfield wealth advisor and author of “Put Your Money Where Your Heart Is.” “How you invest is just as important as how you vote.”

If you’ve had your investments on autopilot, don’t worry—you’re not alone. But, you may want to consider taking a more active approach by investing in companies that are aligned with your values. Not only will you sleep easier, but you could earn greater returns. Stevens says that socially responsible companies tend to perform better over time.

Get in the driver’s seat
There are two main categories of so-called “socially responsible investing” (SRI), according to Colin Chase, a Chicago financial planner who focuses on socially responsible and sustainable investing. The first type is what Chase calls traditional SRI, in which an investor excludes certain industries from his or her portfolio. So, if you don’t want your money supporting companies in the tobacco, oil or pornography industries, for example, you can choose a fund that screens out those kinds of stocks. The second category is called sustainable investing, in which you seek out companies that prioritize protection of the environment.

You can choose traditional SRI or sustainable investing—or a combination of both. For investors who are new to SRI, Chase recommends moving just a small percentage of your assets to a socially conscious fund that matches your values.

“The more investors know about what they own, the more successful they are going to be,” Chase says. “SRI is a way for people to get more engaged in what’s in that mutual fund.”

The numbers add up
If you think SRI is just for tree huggers who don’t care about making money, Evanston resident and Chicago money manager Josh Strauss may beg to differ. He manages the Appleseed Fund, which invests in sustainable, undervalued companies. In 2008, when the market was down 40 percent, Strauss says the Appleseed Fund was down only 18 percent, and the fund has outperformed the S&P 500 by 8 percent annually since its inception in 2006.

“The proof is in the pudding,” Strauss says.