In a world where everything is global and the biggest of companies are often conglomerates of several brands, do you really know what you are invested in? Are your viewpoints on environmental, social and governance being reflected in your portfolio?
Each time a stock is bought or sold, there is a buyer and a seller. Supply and demand definitely impacts the stock market. Often, publically traded companies make decisions based on what they believe will happen to their stock price. The people that determine how a company makes environmental, social and governance decisions are often in the highest places of management of the company, and often they own a vast amount of shares of the stock. Since a decreasing demand for a stock will hurt the price, less buyers can influence company practices.
Socially Responsible Investing (SRI) involves a screening process that allows you to align your values with your money. What used to be common was for philanthropists to make money anyway they could and then donate to the causes they wish to support. However, the tide is changing.
As individuals become more aware of corporate beliefs and practices, more investors are demanding that their investment portfolios align with their moral compass. For example, if you want to support the American Lung Association, then you wouldn’t want to invest your money into tobacco companies like Phillip Morris or its parent company Altria Group. Or, if you are against firearms, then you wouldn’t want to own Olin Corporation which owns the Winchester trademark.
With individual stocks it is a little easier to determine what you own, but a full screening of mutual funds, etf’s, or annuity subaccounts would have to be screened constantly to determine if you hold any companies you have objections to. Or, you could choose to invest with a SRI fund company whose objectives are in line with your own.
If you want to align your money with your morals, then make sure you have a discussion with your financial planner. What is important to one client isn’t to another. Making sure that your financial planner understands your wishes can enable you to have your money aligned with what’s important to you.
Margie Shard is a CFP and founder of Shard Financial Services, Inc., a financial planning and investment strategies firm in Fenton, MI. To contact Margie please call (810)714-5566 or email email@example.com. For more information on Shard Financial Services, Inc., please visit www.shardfinancial.com.
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