Is Socially Responsible good investing?
Recently, the US Department of Labor issued guidance about investing retirement plans in socially responsible companies. In what appeared to be a reversal of the previous administration’s guidance, DOL stated that investments based on environmental, social and governance (ESG) criteria aren’t always a “prudent choice” and that such factors shouldn’t “too readily” be considered as economically relevant.
There’s some truth to this, but it’s really no different from saying that non-financial criteria ANYWHERE might cloud your view in making purely financial decisions.
Here’s the problem: This is taking a very narrow and short-term view of investing.
The question for us, as investors, is how we choose to balance the idea of making the world a better place, versus maximizing financial gain.
You could end up being rich, I suppose, but living in a world and society that you abhor. That you’re not proud to leave to the coming generations.
That’s why socially responsible companies – in many different forms – are changing the way we think about business. Rather than taking from the planet and society and turning that into money, they’re finding ways to GIVE TO the planet and society. While making money.
Don’t be complacent about your investment dollars; this is your chance to put your money where your heart is. Don’t ignore the financials by any means, but don’t forget that your investment is also furthering the values of those you choose to share it with.
You can do that directly to charities, where you turn your investment directly into the mission of that organization.
But if you want to do that in a model which sustains itself by selling products and services – a business – then you may just be able to make your money go further.
It’s still your choice, no matter what the government says.
I’ve developed a tool which helps leaders to assess how they’re doing on these foundational elements. I’ll send you a customized report when you fill it out, giving you some feedback and ideas for where your attention might give the most powerful results. Check it out!