Social responsibility is not immediately appreciated by the stock market and -- like any long-run investment -- takes many years to pay off. Thus, investors should not evaluate companies according to whether they meet quarterly earnings targets, but instead take a long-term view.
A growing number of investors and philanthropists see that as a lost opportunity. What if you could put your investments to work in doing good, while still earning a decent financial return? That question is at the heart of a branch of socially responsible investing known as impact investing.
Until recently, sustainable investing has been regarded, at least in North America, as a niche investment strategy. Mainstream asset managers were often skeptical of it, primarily for perceived performance reasons.
By the time I launched my mutual funds the motivation for socially responsible investing had moved from 'consistent with my own values' to 'consistent with the values of human dignity and ecological sustainability.'
The only thing that sustains the consistent feeling of pure joy is doing in this moment whatever we can uniquely do for the common good. It is the only priority that provides the consistent experience of happiness, our birthright.
Here are two words I want every investor to say to their broker or advisor: "No alpha." "Alpha" is the excess return of a fund over its benchmark index. Nothing has caused investors more harm than the often futile pursuit of alpha. Want proof?
Can the world's most powerful CEOs, beholden as they are to tradition, the profit demands of shareholders and Wall Street financial analysts, embrace the concept of the common good and lead their companies in a more people and earth-friendly way?
At least sixty years of investors boycotting the gun trade has yielded zero result. In fact, SRI activism works best when rewarding companies that care about being good, whose products sustain life rather than take it.
Many of us are now embarrassed to say that our religious or moral or political views should and do affect our investment selections. We know the gatekeepers don't want to hear it; and they know that many of their institutional clients definitely don't want to hear it.
You don't just want smart people to manage your money, you want smart people you can trust -- who are comfortable with the 21st century culture of transparency, not the 20th century secretive approach.
The term "Impact Investing" has taken on many meanings in the past few years. I want to end the confusion and underscore that impact investing must by definition deliver impactful and compelling financial returns.