Investing with purpose

Giving to others is top of mind in December, but making a difference with our dollars isn’t limited to the holiday season. A growing number of Americans are investing their money year-round in companies with corporate values that align with their own.

Indeed, Socially Responsible Investing (SRI) assets now account for $12 trillion — or one of every four dollars — of the $46.6 trillion in total assets under professional management in the U.S., according to a 2018 report from the Forum for Sustainable and Responsible Investment. And that’s a 38 percent increase over 2016.

In a recent survey by TD Ameritrade, 45 percent of investors said they think it’s important to make socially responsible investment choices. Millennials are the most in favor, with 60 percent of the younger generation saying they consider SRI an essential criteria.

The concept of SRI — sometimes referred to Sustainable, Responsible and Impact investing — is at the center of a cultural shift taking place. In previous generations, the norm was to give your money to a broker who would call with ideas. This morphed to an advisory relationship, where commissions were replaced with a fee. The goal was all about maximizing return. 

However, now investors also want to use their money to make an impact. And some studies have shown that financial returns may be the same as traditional investments, if not even better over the long run.

SRI and ESG

Today, the framework that dominates SRI is referred to as ESG, which stands for Environmental, Social and Governance. (There are about 275 ESG-focused funds available to U.S. investors.)

Environmental investing includes companies that focus on renewable energy and sustainability such as wind, solar or water treatment.

Social investing concentrates on businesses that focus on gender equality, job programs and social justice.

Governance focuses on how a company operates, such as the percentage of women and/or minorities in executive leadership or board roles.

However, SRI isn’t necessarily limited to these areas.

In real life 

Here’s an example of SRI in practice: As a parent of three children who are active in team sports, one of my concerns is keeping young players safe on the field, rink or court. The health issues associated with concussions impact families across the state and nation. 

A startup company in Edina is working on a solution. Prevent Biometrics has developed a “smart” mouthguard that measures impacts to the skull in real time. The device won’t avert potential concussions, but will alert coaches and staff immediately so that proper care and protocols can be followed should a player receive a significant hit. 

In time, the data collected should help researchers improve safety throughout all sports. When I learned about the business, I personally invested because the company’s mission aligns with my values and goals. 

If you’re interested in Socially Responsible Investing, start by asking relevant questions: How does an investment or opportunity align with my values? What are the most important characteristics for me? How is my money being used, and how would I feel if others knew I invested in this company? These are just some of the basic questions you need to answer before you can take the next step. 

Learning more

But you don’t have to go it alone. A financial professional versed in SRI can help you find and assess opportunities based on your goals and values. 

At EPIQ Partners in Minneapolis, we discuss the concept of SRI with clients and incorporate conclusions into their investment policy, which guide investment decisions. Our clients are engaged and successful individuals who are looking to do more with their money than just invest for financial gain. 

SRI looks different to each person, and that’s why it’s critical to understand what’s important to you. When it comes down to it, SRI is about putting your money where your values are.

One source for learning more about the growing trend of SRI is the Forum for Sustainable and Responsible Investment, which maintains charts describing the socially responsible mutual funds offered by its member firms. The Washington, D.C.-based forum will host its ninth-annual conference for finance professionals June 10–12 at the Radisson Blu Hotel in downtown Minneapolis.


Dan Aronson has been an investment professional for 25 years and is a founding member of EPIQ Partners in Minneapolis. Learn more at epiqpartnersllc.com.