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The Environment Site Green Living Guides
10 Steps to Greener Investing1. Take stock. As with any investment, the first step of making a socially responsible investment is to think about the level of risk that is acceptable to you and to evaluate your "time horizon." Are you investing for retirement or will you need to liquidate your investments in a few years, say, when your kids start at university? Answers to these basic questions will steer you towards investment decisions that reflect your needs and dreams. If socially responsible investing (SRI) marks your first foray into investing, take a look at EnvoCares guide for would-be socially responsible investors.
2. Consider getting help. Financial advisors and planners can help you through the beginning stages of investing and beyond. The Social Investment Forum provides a directory of financial professionals in your area who specialize in SRI. EnviroCare recommends a series of questions to ask prospective financial professionals to determine their level of overall competence and familiarity with SRI. Simply by asking questions about SRI you'll promote its cause by demonstrating to advisors and planners that there is a significant market of values-based clients. If you already use the services of a financial professional, talk with him or her about SRI to make sure that you share a common vision for your investments.
3. Diversify. Whether in ecosystems or your portfolio, diversity is a good thing. Diverse investments protect against natural fluctuations that might otherwise make your savings extinct. In a volatile financial environment, individual stocks may thrive or they may dive. So unless you're already a skilled investor or are willing to accept high risk, diversify your portfolio. Mutual funds present a straightforward path to diversification. Much of the advice below is geared towards helping you choose from among the many socially responsible mutual funds on the market.
4. Shop around. Survey the mutual fund market, then order prospectuses from funds that capture your interest. The Social Investment Forum's SRI Guide allows you to compare the financial performance of dozens of different mutual funds, view a checklist of screening criteria, see which funds engage in shareholder advocacy, find out their fees and account minimums, and read in-depth fund profiles that include contact information for ordering prospectuses.
Eiris.org, another major clearinghouse for information on SRI, provides more information on ethical funds.
5. Advocate. The vast majority of socially responsible mutual funds employ just one strategy: screening. The Social Investment Forum notes that only 8 percent employ two strategies, while less than 1 percent employ all three. To maximize the environmental value of your investment, try to make it work for the environment as broadly and effectively as possible by focusing on funds that engage in shareholder advocacy and whose profits support environmental causes.
Shareholder resolutions are at the frontier of corporate environmental reform, not just within the financial world, but throughout the environmental movement. Shareholder resolutions are frequently co-sponsored by coalitions of mutual funds and nonprofit organizations as part of concerted social and environmental campaigns. At each of BP's annual shareholders meetings between 2000 and 2002, a coalition composed of the Green Century Balanced Fund, Walden Asset Management, Trillium Asset Management, the World Wildlife Fund, and the U.S. Public Interest Research Group filed a resolution asking the oil company to take a stand against drilling in the Arctic National Wildlife Refuge.
6. Pick a grinner (a green winner) If you crave the challenge of picking individual stocks and the excitement of tracking their financial performance, BarchesterGreen are an excellent resource for tracking your green investments.
7. Join a club Social social responsibility is not redundant. Investment clubs are fun, educational and potentially profitable ways to take the do-it-yourself approach to SRI. They are a great opportunity to get your like-minded friends together for business and pleasure. Investment-Clubs.com features several helpful articles on starting and maintaining an investment club, including an article specifically on SRI clubs. The National Association of Investors Corporation has helped its dues-paying members get hundreds of investment clubs get off and running.
8. Support your Alma Mater Earth It's never too late to be a campus activist. The Oxford SRI Campaign looks at how the £2 billion university investments could be greener and more socially responsible. Get in touch with your alma mater and see if they have anything similar.
9. Retire responsibly Ask your employer's pension administrator if there is an SRI option for your pension plan. You shouldn't have to work for a progressive nonprofit for SRI options to be available to you. Government bodies and corporations alike offer socially responsible retirement plans. If your employer doesn't, rally support among your coworkers by talking to them about the financial and ethical reasons for SRI, and join them in requesting that your employer gratify the interests of its employees. You can facilitate the process by providing your employer with a list of SRI mutual funds.
10. Don't lose sight of the green Remember that while 80 percent of the assets in socially screened mutual funds are screened for tobacco and 60 percent for alcohol, just 20 percent are environmentally screened. Just 8 percent are involved in environmental shareholder advocacy, and green community investments are even more difficult to account for. If doing well for yourself while doing good for the environment is your main reason for choosing SRI, make sure that when it comes time to pick from among the wide variety of SRI options, you stay focused on investments that employ a at least one strategy of environmental screening, environmental shareholder advocacy and community investing that promotes environmental sustainability.23.10.2006. 01:48
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