Cleaning Up with SRI

Tidy one corner of your house, er, portfolio

Time for a confession: I’m bad at housecleaning. But lately I’ve realized why. I get overwhelmed because I expect myself to clean everything at once. (This would explain why I never try.) But a sink here, a floor there—that I can do. It’s my own all-or-nothing attitude that defeats me and leaves me with a messy house. (Well, more often a well-cleaned house produced by a seriously disgruntled partner.)
Ready for the logic leap? I’ve just found out housecleaning is kind of like socially responsible investing. (No, I’m not making this up.)
At a recent SharedVISION event, investment advisor Mike Higgins of the Pinch Group debunked five “Myths about Socially Responsible Investing.” If you weren’t there, you missed some amazing fair-trade chocolate, and Mike’s comments, which I’ll share:

Myth #1: You have to sacrifice performance when you invest in a socially responsible manner. The quick answer: studies haven’t shown that you’ll increase your returns with SRI, but they have established that you won’t lose out. To read more, see sristudies.org.

Myth #2: Socially responsible investing is more expensive than traditional investing. Most investment advisors who provide SRI advice also offer traditional investment advice for their clients—and they charge the same either way. And a survey by Corporate Knights magazine found that management expense charges on SRI funds were only 0.06 per cent higher than those on average Canadian funds, despite the extra research done for SRI funds.

Myth #3: Socially responsible investing is too limiting; there aren’t enough choices. There are now more than 70 SRI funds in Canada, covering all the major asset classes. That may not be as many as the choices of toothpaste in the drugstore, but how much choice does one investor need?

Myth #4: Socially responsible investing screens aren’t “serious” enough; there are still bad companies in the portfolio. Many funds screen out bad actors, then choose to include at least one “best of sector” company—even if the industry has questionable practices overall. That means diversification is achieved and a dialogue can be opened with the one company that is leading the way towards change. But if you’re still not keen on the best-of-sector approach, you can always pick your stocks individually and make sure you love every company you own. Socially responsible investing is as involved—and personalized—as you want it to be.

Myth #5: Socially responsible investing is only for tree-huggers or activists. Serious investing is about making money, not feeling good. Well, that would mean women over the age of 35 with kids are the most active tree-huggers (I admit to having a bit of a thing for that little fig tree in my yard), as that’s the No. 1 demographic for socially responsible investment. And, as Mike pointed out, addressing issues such as climate change, the impact of AIDS on Africa, or rising instability due to the unequal distribution of resources isn’t just a question of feeling good; all these affect business—and your investments.

How does this relate to housecleaning, you ask? One of Mike’s final tips was that you don’t have to get into socially responsible investing all at once. If you want to start slow, just put a portion of your investments into SRI. It doesn’t have to be all or nothing, and it doesn’t make you less of a socially responsible investor. And I can vouch for the satisfaction of one sparkling clean refrigerator, even if there are still dust bunnies lurking under the couch.

Nina Winham is principal of New Climate Strategies (newclimate.ca), a consultancy that advises clients how to engage in, and build value from, progressive change. She cooks great food to thank the people in her life who excel at cleaning.