Sustainable investing that is good for the wallet and the environment

By Amber Fagan

You arrive at the office on your first day of work. You are shown your new desk, introduced to people whose names you will not remember, and then hauled into the Human Resources office where you will most likely spend the rest of the day filling out paperwork.

You flip through the forms and notice one for your 401K. (Take a moment to feel truly grown-up.)

Now, if you are anything like me, you are hopelessly confused as to what you should do with your money. Should you invest more in stocks or bonds? Are you more conservative or aggressive with your money?

Do you want to make a difference with your 401K? If so, then socially responsible investing (SRI) is an investment strategy that seeks to increase financial profit and social good. SRI has been around for decades, but it has gained more ground with the growing green movement.

According to SustainableBusiness.com, only 20 percent of employees have the option of SRI; however, the numbers are growing quickly. It is estimated that by 2010, 60 percent of the workforce will have the option of SRI. It is also called the “second bottom line”, since, obviously the first bottom line if the financial benefit gained through the investment, while the second bottom line is the moral or ethical benefit from investing in companies that seek to improve the environment.

Calvert and Domini are two of the most well known SRI companies.

“Both firms ply the three main tenets of SRI: (1) rigorous research to assess the social and environmental integrity of companies being considered for inclusion in an investment portfolio; (2) using investors’ positions as stockholders (i.e. owners) of companies invested in to advocate for good corporate citizenship (often through the introduction of corporate resolutions); and (3) channeling affordable credit to needy communities ill-served by traditional lenders to rebuild neighborhoods and create jobs,” according to the Good Human.

Although you can sleep better at night knowing your money is working toward a common good, is it financially sound to trust your money to a bunch of tree huggers?

In short, yes.

Both the Domini Social Equity Fund and the Citizens Index Fund have outperformed the S&P 500 since they started. Also, in today’s world, money talks. Dumping your greenbacks into funds for solar power or groups that combat poverty is a good way to use your money to vote for the things you value most.

For more information on SRI, check out Social Funds, Calvert Funds, Domini Social Investments, Social(k), and Social Investment Forum.