(SRI) Socially Responsible Investing, or Sustainable, Responsible, and Impact Investing or ESG investing provides a practical framework for providing investment solutions for fixing much that is wrong with capitalism.  Sustainable companies embrace creative, forward looking and long-term thinking and are of higher quality than companies with low SRI/ESG metrics.  SRI concerns are bigger than just for the bottom line and profits.  SRI takes all stakeholders interests and well-being into consideration.  Climate change is real! We have only one fragile planet, and we all share the same finite air, water, and natural resources.



The United Nations 17 Sustainable Development Goals (SDG's) below help guide our focus on the big picture issues of environmental and societal problems we need to fix, and which can be incorporated into the SRI investment process, and used as metrics for social and environmental change.

The Elephant in the Room-Does SRI/ESG Investing hurt performance?

Bursting the Myth of Under-performance

Research shows sustainable (SRI) investing provides competitive returns and with less risk.The myth that investors must sacrifice performance to invest with their values is simply untrue.  

According to the 2018 US-SIF SRI Trends Report-Numerous money managers and institutions show that (ESG) Environmental, Societal, and Governance screened portfolios can at times out-perform identical non-screened portfolios. So, rather than detract from performance, ESG screens can add value to help avoid some potential risks of companies that don't incorporate prudent ESG practices in management of their companies. Their studies show that being green also makes good business sense in other ways, such as long-term energy savings, lower litigation costs, and having to pay less to borrow money, all improvements to their bottom lines. This is why we are seeing substantially more businesses adopting sustainable business practices. Sustainable business practices and more transparency and accountability aren't just good for image purposes. Although we need to be careful of companies "green-washing" or claiming to do more than they really are in these areas.

A growing number of academic studies demonstrate that SRI/ESG mutual funds perform competitively with non-SRI/ESG funds over time.  This truth is what is catapulting the rapid growth and adherence to the principles of SRI investing by many new and established companies that hadn't incorporated the practices or principles before. In some European countries, SRI principles are mandatory, as they recognize the value and long-term benefits to society as a whole when all stakeholder interests are taken into consideration; what we call the Triple Bottom Line of People, Planet, and Profits.

Why Sustainable Responsible Impact (SRI) or ESG investing?

Is SRI investing just something to make you feel better about your money, or can it really make a difference in the world? We believe that all investing has impact whether positive or negative. The SRI trend is growing, but we need all to take a stand against greed and the antiquated status quo of maximizing profits at the expense of our planet, people and resources. SRI investing may be one of the best and most effective ways we know of to oppose the status quo and to bring about significant change and positive impact in our troubled world.

Together we can create a better world!  But we still have a long way to go to counteract and fight the push-back from greedy capitalists, who put their own profits and interests before everyone else and at any expense.  

Sustainable Responsible and Impact (SRI) investing starts with the same fundamental financial analytical tools commonly used by all financial managers, but integrates additional holistic and rigorous levels of scrutiny and risk analysis of Environmental, Social and Corporate Governance, (ESG) issues acting to improve corporate behavior for the benefit of all stakeholders.

Sustainable investment firms look to invest in high quality companies that meet both fundamentally financially strong criteria, and that also incorporate ESG factors intelligently into their business decisions. These companies tend to perform better and be better business risks, because their managers focus on long-term sustainability, transparency and accountability throughout the organization to promote clear environmental and workplace risk reduction policies.

ESG factor screening can help identify and rule out potentially adverse corporate risks.

Initially SRI efforts first attempt to engage corporations in dialog to influence corporate behavior to better manage these risks. Secondly, if these efforts fail, then we can move to shareholder activism, i.e. proxy voting and corporate resolutions. Thirdly, we can move on to more extreme actions, such as boycotts, divestment, or to support legal action, if all other attempts fail to bring about the desired corporate behavioral changes. The ultimate desired results are to improve all corporate behavior, not just screen out "bad" companies, because we all share the same planet, air and water, and we only have one planet. "So, we need to learn to share and care." We all succeed together or we all fail together. 

According to a Quarter 3, 2020 Morningstar article, the higher the ESG scoring (sustainability metrics), the better the performance of the company and additionally the lower the risk. No wonder their conclusion is that these companies weather downturns better than peers. 

ESG Factors Criteria Chart 

Sustainable investment firms realize that no company is perfect. We have accomplished many successes. We also see that much can and is being done by engagement and having open dialog with companies encouraging them to change to improve their scoring in these and other areas.

Unfortunately, there is no perfect corporation, although there are moves to improve them with B Corps and Green Business certifications.  Transformative Wealth Management was the first financial business in the Bay Area to become a certified Green Business.

We encourage you to take a stand and really make a difference with your money in what we call "Move Your Money 2.0"™, transferring your money from the big banks, plus your other investment assets, credit cards, and retirement accounts into accounts that provide investment options more closely matching your values, so that it can potentially have more positive societal impact, whenever possible and prudent.

Nearly $1 out of every $4 is now invested with Environmental, Social, and Governance (ESG) criteria. Yet according to a 2018 survey by US-SIF, over 1/2 of the population would choose to do more with their money if given the opportunity. So, we still have a long way to go. Take a stand with your money and your investments! 

                        Do your investments align with your values and beliefs?       Be part of the solution, not the problem!

                                   We are here and happy to help you!                   Together we can make a difference!

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