As we wrap up Earth Week here at Hansen’s, we wanted to share some thoughts with you on how investing and environmental sustainability are so inextricably linked. Our global financial systems have historically been at odds with the environment. Dividends and growth were tied to companies that cut down thousands of acres of trees; drilled for, transported, and burned fossil fuels; or manufactured products that were developed to be broken and thrown away, and those products are now filling up our landfills and destroying our oceans.
When you do SRI, your future goals are not contingent on those companies making money from endeavors like the ones I just described. When you invest in a socially responsible portfolio, you can screen out fossil fuel companies, and your investments are fossil fuel free. Let’s repeat that, for the people in the back. Socially responsible portfolios are Fossil. Fuel. Free.
It doesn’t end there.
The companies that are included in SRI are positively screened for their Environmental performance. That’s the “E” in ESG, and that’s how we create our portfolios. So what does it mean to positively screen? It means that we seek to include companies that are doing well environmentally, not just screening out companies that are doing poorly. We’re including companies that are sustainably manufacturing solar panels; have a sustainable supply chain; are energy efficient; have corporate policies surrounding recycling, reducing waste, and reusing materials; have an electric vehicle fleet; and on and on.
But guess what? It doesn’t end there either.
When you invest in a socially responsible portfolio, your shares are being leveraged to effect positive change as it relates to environmental sustainability. What does that mean? When you own shares of a mutual fund, you indirectly own shares of hundreds of different companies. And the managers of those funds, they’re voting your shares, and mine, and everyone else that owns that specific mutual fund. We all join together in collective action, and our shares are being voted. So what are we voting for? We’re requiring companies that source their energy and electricity from renewable sources; reduce their use of plastic; become even more efficient in their supply chain; stop chopping down rainforests for palm oil; require practices to stop polluting water; and on and on.
When you do SRI, you’re sending a message to the old companies in your portfolio that you don’t want to invest in companies that don’t make the environment a priority. When you do SRI, you’re aligning your investments with your values. When you do SRI, you are an advocate for the environment and for environmental sustainability, and you are holding publicly traded companies accountable for their business practices because you are a shareholder and they have an obligation to listen to what you think. And this is all happening every day, behind the scenes, when you do SRI. And with the purpose of investing being to meet the goals that you have for the future, the cherry on this environmentally friendly sundae? You don’t have to sacrifice on return. Studies have shown time and again that when you do SRI, you can outperform.
So this Earth Week, think about the good you’ve done for the planet. You’ve divested, you’ve reinvested, and you’ve engaged. When we all do this together, we can make a difference. And we are. Click these links to hear about some of the success stories of Shareholder Advocacy with the mutual funds that we use in our portfolios.