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GreenMoney Journal - publishing since 1992
Fall 2010 issue
Socially Responsible Investing – Better Companies, Better Communities
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Natural Investing: A Profitable Path of Financial Integrity and Wellness
Hal Brill, Jack Brill and Cliff Feigenbaum
Turn on any financial talk show and you will be deluged with advice about how to make more money
(or not lose it). You'll learn which kind of IRA is best for you, and hear arguments rage about the
pros and cons of no-load mutual funds. This is useful information, but it doesn't go far enough.
Given the central, powerful role of money and business both in our society and our personal lives
it is astonishing that so little attention is given to the social, ethical and spiritual dimensions
of money. Even the most caring commentators seem oblivious to the enormous impact our financial
decisions have on communities, the earth, and our own peace of mind. We've ignored the fact that
our money carries our voice to the world.
When we set out to write Investing with Your
Values, we looked at questions that are fundamental to healing our relationship with money. How can
people include their spiritual, social, environmental and ethical values when making important
financial decisions? Why do so many conscientious, good-hearted people make investments that
conflict with their own deeply held beliefs? There are of course no easy answers. We have found
that the status quo "where money and values are separated by an impenetrable wall" is rooted in an
outdated mechanical worldview that sees everything as parts of a giant machine. When we shift
towards a natural worldview (of interrelated living systems), a new sort of investing emerges:
Natural Investing.
Natural Investors are shunning conventional wisdom that says we must
abandon ethics when making financial decisions. People of all income levels, from across the entire
political spectrum, are using the tools of Natural Investing to find profitable investments.
According to the Social Investment Forum, well over two trillion dollars is invested today using
some sort of ethical criteria; this represents almost one-tenth of all investment dollars. Nearly
every mainstream investment option now has a values-based equivalent. You don't need a lot of money
- several screened mutual funds and community banking options welcome small investors who can start
with as little as $50. All that's really needed is the willingness to identify and consider your
personal values when making decisions about your money.
Answering the
Skeptics
If you're reading this article, it's likely that you are at least
curious to learn more about the interface of money and spirit. But it takes courage to examine
honestly the ethical component of one's investments and become aware of any inconsistencies. So it
is understandable that many people try to avoid the issue by leaning on one or both of the
following myths. The fact is, these common claims are nothing but empty straw men, set up as easy
targets but bearing no relation to the reality of Natural Investing.
Myth
One: Limiting one's investment choices by using social, environmental, or ethical criteria
results in lower financial returns.
The Facts: It is true that Natural
Investors voluntarily limit their choices, but this has not led to any systematic underperformance
in the universe of stocks typically chosen by Natural Investors. In fact, solid statistical
evidence shows that investments chosen with social, environmental, or ethical criteria perform as
well as or better than those chosen with financial criteria alone. In 1990, the Domini 400 Social
Index was launched; it includes socially screened companies in a similar range of sizes and
industries as the unscreened Standard and Poor's 500. Over the last ten years the Domini 400 has
outpaced the S&P 500. This is a truly remarkable feat, but it is only one of many studies that show
a positive correlation between corporate responsibility and corporate profitability. So much for
the myth that "good guys finish last."
Myth Two: Natural Investing is
only for tree-hugging radicals and aging hippies.
The Facts: Natural
Investing in the United States traces its origins to Quakers and other Christians who could not
live with the inconsistencies between their beliefs and their investments. Today a diverse range of
strategies are available to support investors with wide-ranging values, from conservative
Christians to farm-belt traditionalists to environmental visionaries. Most screened mutual funds
aim at a broad cross-section of common interests. Natural Investors are not antibusiness, nor are
they dabbling in collections of fringe companies. For example, the Domini 400 includes many
household names, including Home Depot, Xerox, Johnson & Johnson, Coca Cola, and BankAmerica.
Although none of these companies is free of controversy, each has particular strengths that led to
its inclusion in the index.
The Wheel of Natural Investing
Natural Investing enables you to bring your particular social, environmental, or ethical concerns
to the money table. Although most Natural Investors grapple with mainstream topics like corporate
responsibility and workplace conditions, your investments can be customized to focus on a nearly
unlimited array of issues. A full range of financial objectives can be met with Natural Investing,
using everything from conservative, government-guaranteed bank programs through socially screened
mutual funds to high-risk venture capital.
The four spokes of the "Natural Investing
Wheel" is a map of the four major strategies that Natural Investors use to bring their values into
the financial world:
1. Avoidance Screening is the familiar method of choosing not to
invest in industries by which you do not wish to profit; tobacco, weapons and environmental
polluters are some of the many commonly-used screens. For example, Philip Morris wouldn't get
through the avoidance screens of an investor who has a "no tobacco products" screen.
2.
Affirmative Screening, which we also call "prospecting," is where investors actively seek out
investments in activities in which they do want to support, bringing their vision of a positive
future into the world. This can focus on leading-edge companies in emerging fields like alternative
energy and natural foods; or, it may include investments in large companies or even government
agencies that are addressing the concerns of investors. Many prospectors buy stock in companies
that demonstrate a high level of commitment to their workers, their communities, or the
environment.
3. Community Investing. This rapidly emerging branch of Natural Investing is
especially useful for getting your money into the hands of grass-roots programs and economically
marginalized people, locally or globally. Community Investing initiatives include affordable
housing, small business lending, targeted investment in both urban and rural areas of the country,
and microenterprise development throughout the world. It is and excellent way to put your savings
to work and provide a 'hand up' to those who need access to capital.
4. Shareholder
Activism. This potent strategy provides a means for changing companies from the inside. Shareholder
activists have a wide range of tools available to them, including dialogue with companies on issues
of concern and sponsorship of shareholder resolutions when companies refuse to talk or when the
dialogue breaks down. These methods achieved stunning results in the campaign to end apartheid in
South Africa and are now being applied to a wide range of foreign and domestic concerns such as
sweatshops, excessive executive pay, as well as corporate disclosure and transparency.
Towards Financial Wellness
In our work with investors, we develop
relationships that go beyond superficial discussions of stocks and bonds. Our real job is to help
people move towards "financial wellness" by helping them identify their hopes for themselves and
the world, and to co-create a financial plan that balances all of their concerns. Most people wish
for enough money to feel secure and happy, to support them in fulfilling life dreams, to take care
of loved ones, and maybe to have a little left over just for fun. Natural Investing fills these
needs by helping people develop a healthy relationship to their money. Living expenses,
investments, and giving are balanced in ways that works for each person's unique interests and
goals.
But money alone does not feed the soul. And no amount of money can guarantee
security in a world facing its ecological and social moment of truth. When we delve deeper with our
clients, exploring their true aspirations, two cardinal, nonmaterial desires nearly always come up.
We began calling these desires "natural" because they transcend all class or cultural groupings.
They seem to call each of us in different way's speaking for the human spirit, reminding us of our
highest qualities. These yearnings-of-the-heart underlie the daily, personal choices made by the
Natural Investor:
The natural desire to be of service, to "make a difference" and help
improve life on Earth, for ourselves, our children, and children yet unborn.
The natural
desire for integrity, to "walk our talk" and live in ways that are consistent with our values.
The world today reflects the unnatural separation of money and values. The United States is
the richest country ever, and material progress has brought immeasurable benefits to the world. But
the pursuit of wealth-at-any-cost is also responsible for human suffering, gross inequities in the
distribution of this wealth, and environmental devastation. Enron is a prime example of this. Our
global economy is the central nexus of human activity on the planet; its influence radiates into
every sphere of human endeavor. If we are to fulfill humanity's potential as stewards of a healthy,
prosperous planet, each of us must connect with the seeds of our own natural desires and plant them
smack dab in the middle of Wall Street and our entire economic system. As we learn to make money
and make a difference, we are bringing essential human values back into the core of our society.
7 Steps to Natural Investing
1. Financial Check-up. Review your
current financial situation and design a financial plan that will help you achieve your goals in
life.
2. Values Check-in. Clarify your personal values and define how you want to relate
to the social, environmental and ethical issues of our times.
3. Choose your Natural
Investment Strategies. Review the Four Spokes of the Wheel of Natural Investing and decide which
strategies (Avoidance and Affirmative Screening, Community Investing, Shareholder Activism) you
wish to use.
4. Design your Natural Portfolio. Select specific investments that will
enable you to both make money and make a difference.
5. Change your Life. Review your
spending patterns and work situation in light of your values; make adjustments such as reducing
consumption, creating your right livelihood and supporting causes that you believe in.
6.
Change your Community. Bring Natural Investing into your community through supporting initiatives
that strengthen local economies.
7. Change the Economic System. Become a player in
redesigning the global economic and political system so that it better reflects humane and
sustainable values.
Article written in 2001 was adapted from Investing with Your
Values: Making Money and Making a Difference by Hal Brill, Jack A. Brill and Cliff Feigenbaum.
Copyright 2000, published by New Society Publishers.
To order send check for $20 (includes
shipping) to:
The GreenMoney Journal, PO Box 67, Santa Fe, NM 87504. Email: cliff@greenmoney.com.
For more information on the book
go to- http://www.NaturalInvesting.com
Hal Brill and Jack Brill are financial consultants
who have specialized exclusively in values-based investing for over 10 years. They are members of
the Social Investment Forum and co-founders of Natural Investment Services, serving investors and
providing social research on mutual funds. Jack is co-author of Investing from the Heart.
Email: Hal@NaturalInvesting.com or Jack@NaturalInvesting.com.
Cliff Feigenbaum is
founder and publisher of GreenMoney Journal, a bimonthly newsletter that has emerged as a leading
source of in-depth information on socially responsible investing. Subscriptions are $50 a year. He
may be contacted at The GreenMoney Journal, PO Box 67, Santa Fe, NM 87504. (505) 988-7423 or
email: cliff@greenmoney.com or web:
http://www.greenmoney.com
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MISSION
STATEMENT
The GreenMoney Journal encour-ages 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.
“Responsibility from the Supermarket to the Stockmarket.”
The material presented in this news letter is for educational and
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Copyright 1995-2010 by the
GreenMoneyJournal ®
Green Money is a Registrated Trademark
of The GreenMoney Journal / Cliff Feigenbaum
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