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GreenMoney Journal - publishing since 1992
Fall 2010 issue
Socially Responsible Investing – Better Companies, Better Communities
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Q & A with Paul Sutherland, author of the new book, The Virtue of Wealth
GMJ: Tell us about your new book The Virtue of Wealth and why it is important for everyone
to read it?
PAUL: I think most people are a bit confused and
disillusioned about their personal finances, especially the way they integrate work, money and time
into their lives. Everything is interdependent and connected. We are emotional beings that seek
happiness and avoid suffering. We are intellectual and wish to have clarity and peace in addition
to feeding our curiosity and understanding. We are also spiritual and need to connect with each
other, nature and God to feel a sense of belonging, worth and relevance. Of course, in reality, we
live on the physical plane of work, money and time, which often overwhelms our emotional, spiritual
and intellectual needs. The Virtue of Wealth attempts to pull this all together to integrate and
connect our lives so we can be happier, more relaxed and better able to enjoy life.
GMJ: What do you want readers to take away after reading the
book?
PAUL: I hope readers of The Virtue of Wealth will say,
"This book is great. I feel smarter, happier and more powerful." I want readers to "get it" and
feel the need to pass it along to friends and family. Frankly, I have already received positive
feedback on the book. What is most fulfilling for me is the smile I see on peoples' faces as they
describe my book's influence on their own lives - how they view the world and how they react to it.
The book seems to be very different for everyone - it's like a smorgasbord from which people take
what they need. Practically speaking, I want readers to feel more powerful and confident. I want to
provide the knowledge they need to confidently and eloquently discuss money and finances with their
Alan Greenspan and Rush Limbaugh-loving neighbors. Of course, this book will equip readers to take
care of their personal finances, budgeting, retirement planning, education planning and
investments. Equally important, they will be savvy consumers of financial products like insurance,
credit, investment advice and retirement plans. Home buying is also covered, and I am confident
many people will find that area helpful.
GMJ: You talk about
"creating lasting wealth." How can people accomplish that?
PAUL:
Know yourself! Is lasting wealth a 12-bathroom home with gold bathtubs, or is it a life
abundant with the resources to support what is most important to you? For most of us, love, family
and friends, our personal health, and happiness are more important than a big home. But having a
big home is good, too, if that is truly what you want. So, of course, you must first decide what
you want your life to look like. What are your commitments? What are your values? How do you spend
your time, talent and treasure to take care of your real needs? Money is the easy part of the
equation, but then we must consider the tradeoffs in our lives.
GMJ: After this last year's dismal returns on nearly all asset
classes, jobs lost and business failures, how do you think times will change going forward for
investors?
PAUL: Every investor needs to realize some basics.
First, life goes on. Economic activity is always happening. Second, investments are merely tools to
help support our lives - there is no perfect investment for every economic climate, so competent
management is key. There will always be creative distraction and emerging growth areas to avoid or
embrace. Third, even though the investment basics seem simple, they require consistent analyzing
and monitoring.
At FIM Group we believe the U.S. will have a slow-growth economy for some
time. Worldwide, however, there will be areas of strength and growth like energy, health care,
infrastructure and agriculture, especially in regions that are regarded as emerging markets. So as
global managers we tend to invest in global companies involved in these industries. Going forward
investors will need to be more savvy or delegate their management to savvy global managers. At FIM
Group we believe that indexing, or just buying the market, is illogical because all that's
available are crummy companies in crummy industries. Why own housing-related investments, retail,
tobacco, old-economy manufacturing, banking, finance or alcohol makers when you can own good
companies in sustainable industries?
GMJ: What is your philosophy on socially
responsible investing?
PAUL: Although my company, FIM Group, is
usually identified as an SRI-oriented firm, I have to admit that the idea of "socially responsible"
investing is similar to the sound of fingernails on a chalkboard. Everything we do has elements of
irresponsibility in it. I drive a car, I ride on airplanes, I keep the house too warm in winter and
too cool in summer, and I don't recycle or buy locally enough. What we want for our investments is
economic responsibility, ethics as part of the culture, and sustainability from an environmental,
process and systems point of view.
Simply, we want well-managed companies that, with love,
care and sincerity, try to do good and not bad. Tobacco is bad. Dumping sludge in a river is bad.
But after the obvious ethical screens, defining good and bad becomes more difficult. Social
screening is not the answer. I think social screens are a simple way to greenwash a judgment call.
SRI screens try to turn assessing a company's common sense and virtue into a shallow and
bureaucratic process that does little to help the common good. It seems that the social screeners
and SRI movement are more marketing hype than reality. While there are many well-meaning people in
the SRI movement, I think that values are an important part of investing. I find it offensive that
anyone has the gall to call themselves a "socially responsible manager." Does it mean that other
managers are irresponsible? I love the Caux Round Table's (http://www.cauxroundtable.org ) work and
believe that investors that say they are values-neutral are reflecting their own personal values. I
really respect GreenMoney Journal for providing a resource to help investors that feel, as I do,
that values are an important part of investing. We are all unique, and I think our investments
should be consistent with our own values.
GMJ: Why should we be
interested in price over value or growth of an investment?
PAUL: Price
matters most to a true investor. Think of all the real estate investors that are underwater on
their homes merely because they overpaid for them. The price you pay for an investment's intrinsic
value is the key. You don't want to overpay for brands, cash flow, earnings, dividends and the raw
assets of a company. You need to pay a price that gives you a good margin for error. Most investors
spend little time looking at the value of an investment. Even fewer think about what the company
will look like in five, 10 or 15 years.
GMJ: What should investors be looking
for today?
PAUL: Investors should seek a passionate investment
manager who is ethical, honest, has at least 10 years of real money-management experience and loves
investing. Don't hire a firm that regards buying and selling mutual funds as management. Hire
someone with years and years of real stocks and bonds investment experience. The Virtues of Wealth
provides some guidance on finding a good manager.
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