Leveraging Green Initiatives to Keep Your Nest Egg in the Black.
These days, the “Green Initiative” harkens images of tree-hugging, climate-warming idealists – those who are committed to a holistic wellness approach for our planet, our global community, and our families. These aren’t the hippies of the 1960’s and 70’s, but the businessmen and women of today.
Webster defines “sustain” as “to give support or relief to; to supply with sustenance; nourish; keep up, prolong.” Let’s apply this definition to the concept of sustaining financial affluence, employing a holistic, sustainable perspective. By its very nature, capitalistic, profit-oriented business often flies in the face of a green, sustainable mindset. You don’t have to search far to find stories of how some businesses continue to compromise the environment and deplete our natural resources to bolster profits.
Yet with global and economic climate change now clearly on the horizon, the imperative of sustainability is starting to transform the world’s capital markets towards more environmental, social and governance factors. As we consider the business of our lives – specifically our personal finances – as they relate to this global oxymoron of “sustainable business”, the question is, how do we balance sustainability with affluence and still manage to “sustain” our personal financial portfolio?
Of course, investing in organizations that are oriented toward nourishing and protecting our future is always prudent… but which ones, and how?
Dow Jones Sustainability Index
The Dow Jones Sustainability Index (DJSI) monitors the financial performances of the top sustainability-focused companies around the world. The index is an amalgamation of leading companies, chosen based on long-term dedication to economic, environmental and social success. The DJSI is comprised of various benchmarks, covering global and regional markets.
To determine inclusion in the indexes, a systematic corporate sustainability assessment is applied to identify the leading companies in 57 different industries. Both general and industry-specific criteria are considered, including energy use, corporate governance, climate change strategy, human resources development, stakeholder relations and knowledge management.
The DJSI is controversial in that it chooses “best in class” stocks from any business sector, including the sin sectors – such as tobacco, gaming, and arms manufacturing. “Companies chosen from these sectors have met the criteria of moving towards future world sustainability,” say the managers of the DJSI. “If you exclude them, you do not give them an appropriate incentive to improve.”
On December 18th, 2009, the Dreyfus Corporation launched the first ever U.S. based – Global Sustainability Fund. This fund invests in stocks based on the DJSI. Dreyfus is one of over 70 financial institutions around the world licensed to offer such a fund; they are the first in the United States.
Asset managers use the DJSI index as a benchmark for the management of sustainability portfolios. The index allows them to consider, relative to other companies in and across industries, not just an organization’s financial strength, but activity such as corporate conduct, labor practices and environmental policies.
Socially Responsible Investment
Socially responsible investment companies (SRI) such as Calvert Group follow a similar approach, though certain sectors, such as arms manufacturing, are always excluded. “The SRI portfolios haven’t been as affected by the downturn,” says Ted Ning, Executive Director of LOHAS. “For ethical reasons, shareholders are wanting to put their money in places where ‘real value’ lies.”
A shining example is the recent move by TIAA-CREF, the $402 billion pension fund giant, which on January 4, 2010, became the first large U.S. asset manager to divest itself of investments with companies over concerns about human rights abuse in Sudan. TIAA-CREF sold $58 million in shares of four Asian oil companies, in a victory for activists focused on the genocide in Darfur. This divestment is likely to put pressure on other large asset managers to take similar action.
Ning says that our society is experiencing “change from within.” True shareholder advocacy is forcing companies to change their practices, re-thinking the ways that business is conducted. For those that are aggressive in wanting to make change, Ning suggests a direct approach: “Go to Conoco Phillips and ‘take names.’ ” In the midst of the existing confusion and stigmas that exist, there are large companies, such as Coca-Cola and Wal Mart, who are taking their sustainable responsibilities very seriously.
Ning’s advice for consumers is to “slow down” and be truly aware of what they are doing, and what they are investing in. “There’s a lot of fear and historical baggage that people carry associated with money, often involving identity-based habits. Stop comparing yourself with what your neighbors are doing. Historically, irrational people have been able to make a lot of money, which created irrational investment decisions, and people end up kicking themselves for not doing the ‘right’ thing. Going forward, those that are ‘smart’ are the ones who will be making money. Those that are slow and steady, and are aware of what they need and don’t need, will become the affluent investors.”
Evolving out of the ethical, socially responsible investment and responsible investment waves, sustainable investment involves the conscious integration of extra-financial factors into strategies for generating long-term financial returns. In essence, sustainable investment is fast becoming the smart way of generating long-term returns. With conventional investors now scrambling to factor in issues such as climate change, business ethics and human rights, sustainable investment represents a turning point in the evolution of global finance.
Alternative Investing Reference Index
Courtesy of The Sustainability Store ®
Investor resource for alternative energy stocks. Provides high-quality, original research into alternative energy, renewable energy, and clean technology companies.
Calvert Foundation is a socially responsible organization using community investment to finance affordable homes, fund small and micro businesses and engage in community development. Partnering to alleviate poverty.
America’s largest independent charity evaluator, provides free financial evaluations of America’s charities. We are the individual donor’s first source for unbiased news and information on philanthropy and nonprofit organizations.
Launched in 1999, the Dow Jones Sustainability Indexes are the first global indexes tracking the financial performance of the leading sustainability-driven companies worldwide.
Ecobanca is a non for profit organization whose mission is to finance sustainable development. The Ecomonex fund is a fixed income fund which donates 0.50% of its capital for the conservation of the Natural Protected Areas. It has given an average profit of 7% in Mexican Pesos. And has helped to finance diverse projects in different natural protected areas.
The Future 500 provides tools and services that enable best practices in stakeholder engagement at the world’s leading companies to advance global citizenship.
Gaia Trust is a Danish-based charitable association founded in 1987 on the initiative of Ross and Hildur Jackson, with the intention of supporting the transition to a sustainable and more spiritual future society through grants and proactive initiatives.
Green Building Finance Consortium is a group of leading corporations, real estate companies, and trade groups who have joined together to address the need for independent research and analysis of investment in Green or energy efficient buildings. The mission of GBFC is to enable the private real estate sector—corporations, investors, lenders, and developers—to appropriately recognize the value and risk of investment in Green Buildings.
No-load mutual funds investing in environmentally progressive companies, and working towards improving corporate environmental responsibility.
Encourages and promotes the awareness of socially & environmentally responsible business, investing and consumer resources in publications & online. Our goal is to educate and empower individuals and businesses to make informed financial decisions through aligning their personal, corporate and financial principles.
Money management for the socially responsible investor.
Matt Schmidt is a Financial Planner who incorporates Socially Responsible Investing into people’s portfolios. He feels very strongly about this issue, and is trying to educate his clients.
Spend Smart. Live Healthy. Your #1 source for organic and eco-friendly coupons, online and offline.
The first independent full-service investment brokerage in the US to specialize in socially responsible investing (SRI).
The largest personal finance site devoted to socially responsible investing including information on SRI mutual funds, community investments, corporate research, shareowner actions, and daily social investment news.
Transforms the way the world does business by leveraging its members’ collective strengths of leadership, knowledge and enterprise for a more just and sustainable economy.
Capital Line Energy Financing provides financing and investment services to renewable energy sector.
Committed exclusively to socially responsible investing, Trillium is the leading innovator in shareholder activism, research, social screening, and community-based investing. Over $600 million assets under management.
A leader in socially responsive investing since 1975, managing our clients’ assets to achieve their specific financial and social objectives. For both institutions and individuals.
Chris Steely is a world-renowned personal effectiveness & business coach, and veteran professional speaker. He has facilitated hundreds of teams around the world in holistic life & business success. His capability to distill key principles into usable tools has made him one of the world’s most coveted facilitators and resultants.