When you disagree with a company’s sustainable or lack of sustainable business practices, what do you do? You contact the company. You sign a petition. You boycott their products. You inspired others to “vote with their feet” or “vote with their dollars.” You pride yourself in the fact that you don’t shop at Walmart or eat at McDonalds. You are using your “consumer dollars” to send a strong message to corporate America, but what about your “investing dollars”? When it comes to 401(k)s, mutual funds and the stock market, do you know where your money goes?
The socially responsible and “green” consumer movement has taken off in the U.S. There are a plethora of websites and resources available to help us make the right purchasing and lifestyle decisions. Two of my favorites are LOHAS (Lifestyles of Health and Sustainability) and Ideal Bite. I take their recommendations to heart. I make the conscience choice not to be a patron of socially and environmentally irresponsible companies, but am I an unknowing shareholder?
Some of you may already be involved in socially responsible investing. Bravo! I applaud your acumen. But some folks, myself included, are scratching their heads and saying, “OY!” So I decided to do a little research. Now, I’m not a Wall Street tycoon by any means. My participation in the stock market is limited to my 401(k) and stock options from a previous employer, but I wanted to share some of what I learned.
Make the call…
Call your HR department or the investment firm that is handling your 401(k) or IRA account and ask about the mutual funds you are investing in. Do they consider corporate social responsibility (CSR) metrics? Are there any SRI options available to you? One criticism leveled against SRIs is the practice of negative screening or the weeding out companies engaged in alcohol, tobacco or gambling. But this is an antiquated definition. SRIs are becoming more focused on rewarding positive CSR practices. A couple of great resources are the Social Investment Forum and Domini Social Investments.
Any savvy socially responsible investors out there who have other thoughts or resources, please share!
Next, I’ll talk about shareholder advocacy and the importance of proxy voting…Do Shareholders Impact Sustainable Business Practices? (Part 2 of 2)
Image credit: Perpetualtourist2000 at Flickr under a Creative Commons license