Smart Directions | Ethical Investing | April 14, 2016

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Dollars and Sense

Smart DirectionsEmmet ONeal LibraryMountain Brook, AL

Ethical Investing


DisclaimerAndreas Rauterkus is not a registered investment advisor or broker/dealer. Readers are advised that the material contained herein should be used solely for informational purposes. Andreas Rauterkus does not purport to tell or suggest which investment securities attendants should buy or sell for themselves. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.



What is ethical investing?Socially Responsible InvestingEnvironmental, Social and Governance (ESG) Investing

Three legs of ethical investing



What is Ethical Investing

Socially Responsible Investment (SRI) is the integration of personal values with monetary investment

Three Legs of SRIPositive (affirmative) & Negative (avoidance) Social Screening

Shareholder Engagement / Proxy Activism

Community Development Investing / Lending / Micro-Lending

ImplementationAvoidance: choose not to be affiliated with firms engaging in business activities that conflict with values

Positive Investment: seek out firms engaged in business practices consistent with social concerns

Shareholder Advocacy: influence business activities or policies


SRI Trends

Environmental, Social, and Governance (ESG) CriteriaEnvironmental criteria looks at how a company performs as a steward of the natural use, waste, pollution, natural resource conservation and animal treatmentSocial criteria examines how a company manages relationships with its employees, suppliers, customers and the communities where it operatesGovernance deals with a companys leadership, executive pay,auditsandinternal controls, andshareholder rights

ESG Issues Incorporated in Asset ManagementEnvironmental investment factors are incorporated in the management of 672 investment vehicles with $2.94 trillion in assets under managementSocial criteria, which include Sudan-avoidance policies and community-related investment policies, incorporated in the management of $4.27 trillion across a wide range of 770 investment vehicles Governance issues are incorporated by a total of 501 investment vehicles with $3.53 trillion in assetsProduct-specific criteria, such as restrictions on investment in tobacco and alcohol, are included in the management of 445 investment vehicles with $1.76 trillion in assets.


Performance of SRI Funds

Alternatives?Invest conventionallyAfterwards give your outperformance to charities that make a difference. Problem : Some problems cannot be cleaned up, such as malformed babies or drowning and starving polar bears.

Problem : Most cleanups cost more than doing it right in the first place. How much outperformance will it take to clean up mess?

Major Players


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