Socially responsible investing for a greener Earth

With “An Inconvenient Truth” there has been a real shift in our thinking about climate change and the environment, and this year’s EarthFair offers a great opportunity to look at and come up with ways to impact our earth in a more positive way. It seems even more critical than ever to find ways to change our day-to-day behavior to reduce our footprints on the earth. What can we do that will make a difference? Can we take advantage of new opportunities to buy green and organic? Can we install solar panels to take advantage of both our wonderful sunny climate and available tax benefits? What about hybrid or better mileage vehicles?

As we all grow closer to retirement age and Baby Boomers begin to turn 60, it is clear to many of us that we need to add financial decision making to our plans to make change for the good. Socially responsible investing can allow us to make the impact we want to see, but may not know how to do as individuals. We can invest our funds in ways that not only won’t contribute to pollution and waste, but that will actually make a positive impact.

Our poor savings rate and the difficulty of keeping up with increasing college and health care costs are well known. Debates rage about the percentage of our incomes we need to set aside, and how much we will need in order to be able to retire some day (85% of current income, adjusted for inflation, is one key financial services company’s standard).

It can seem overwhelming! In my 22 years of working with people and investment decision making, it has never been more complex, but the good news is that more information is available to help you make better choices. Knowing where your money is invested, and if it is really supporting your best interests, can be eye opening.

Taking control

For those of us lucky enough to have employer retirement plans, some decisions are made for us about investment choices, but how we invest our own contributions may make all the difference in our long term prospects. How do we make careful and socially responsible decisions in placing the money that we ourselves need to set aside, whether through an employer plan or on our own? How can we actually find companies to invest in that are trying to solve problems and not contribute to them?

Behind the screen

There are several ways to screen your investment choices:

Positive screens. Look for companies that have policies you support and create quality products that are useful, safe and environmentally friendly. Positive screens include fair business practices towards employees of all backgrounds, community contribution efforts and environmental products and standards. (www.wildershares.com discusses the clean and renewable energy sector and has several clean energy indices.)

Negative screens. Eliminate companies with policies or products you don’t approve of, which might include tobacco companies, toxic waste producers, makers of weapons or producers of nuclear energy. You might also create your own particular screens based on your ideals and values, and research companies on the internet to see where they stand. Domini Social Investments (www.domini.com) can give you more ideas on this topic.

You might also look at ways to become a shareholder activist and get companies to change policies of which you disapprove. The Interfaith Center on Corporate Responsibility (www.iccr.org) monitors corporate business practices. Vote on resolutions you receive with notices about company annual meetings, or attend them yourself!

You can invest your money in community development funds for urban areas and in sections of our country where the need is greatest. Hope Community Credit Union, for example, invests in the communities affected by hurricane Katrina, so your CDs enable them to make loans to people and businesses that need them to survive. Jewish FundS for Justice has a community development fund, as do other religious groups.

Mutual interest

A simple way to be a socially responsible investor, even without a lot of money, is with socially screened mutual funds, many of which have great performance by any measure. The minimum investments for these funds can be as low as $500, and setting up an automatic monthly investment plan, for an IRA or Roth for example, can allow you to begin with even less (about $100 a month). These funds include Calvert Funds, Pax World, Parnassus, Ariel, Domini Funds, and Working Assets, and they all have web sites for you to research.

If you have some assets you’ve accumulated, you might choose a professionally managed account where you can pick the social screens. First Affirmative, one of the financial advisory firms I work with, has several types of managed accounts. One choice is a portfolio that invests in companies that have a high impact on the planet for good. The companies in this portfolio support alternative energy development, organic food and health, and those that try to solve problems about clean water and waste disposal.

Whatever you choose to do, use this Earth Day to examine your values and priorities, take some action steps now and see what you can do to make a greener home for us all!

Ahouva Steinhaus, M. Ed. is the financial services principal of Asiel and Associates and a board member of San Diego EarthWorks, organizers of the annual EarthFair. She specializes in socially responsible investing and can be reached at (619) 640-0011 or (800) 760-2840.