Resolution 2014: Make My Investment Portfolio Responsible

stock marketBy Dale Wannen

As we enter 2014, many of us are now pondering a New Year’s resolution.  Some of us may improve our diets by eating more of that organic rainbow chard or scrumptious kale while others may consider getting up a little earlier to sweat it out at that 6:00am bootcamp or Crossfit class.  One resolution that you may want to consider is to create a healthier investment portfolio. As we get our monthly statements and quickly gaze at the positions, one cannot help but be upset by seeing big polluting oil companies or  greedy banks show up as holdings. But it doesn’t have to be that way. Below are the top 8 questions when it comes to the world of sustainable and responsible investing (SRI).

What is sustainable and responsible investing or SRI?

Sustainable and responsible investing is an investment discipline that considers environmental, social and corporate governance criteria (ESG) to generate long-term competitive financial returns and positive societal impact. Today, more than one out of every nine dollars under professional management in the United States—$3.74 trillion or more—is invested according to SRI strategies. Some investors are driven by their personal values and goals, their institutional mission or the demands of their clients, constituents or plan participants; they aim for strong financial performance, but also believe that these investments should be used to contribute to advancements in social, environmental and governance practices. Some are seeking financial outperformance over the long term; a growing body of academic research shows a strong link between ESG and financial performance.

What are the approaches investors typically utilize in SRI?
Traditionally, responsible investors have focused on either one or both of two strategies. The first is ESG screening, the consideration of environmental, community, other societal or corporate governance (ESG) criteria into investment analysis and portfolio construction across a range of asset classes.  An important segment, community investing, seeks explicitly to finance projects or institutions that will serve poor and underserved communities in the United States and overseas.  The second strategy, for those with shares in publicly traded companies, is filing shareholder proposals.

How large is the sustainable and responsible investing marketplace? How many assets are involved?
The U.S. SIF Foundation’s identified $3.74 trillion in total assets under management using one or more sustainable and responsible investing strategies. From 2010 to 2012, sustainable and responsible investing enjoyed a growth rate of more than 22 percent, increasing from $3.07 trillion in 2010. More than one out of every nine dollars or 11 percent under professional management is involved in sustainable and responsible investing.

Who are sustainable and responsible investors?
Sustainable and responsible investors comprise individuals, including average investors to very high net worth individuals and family offices, as well as institutions, such as universities, hospitals, foundations, public and private pension funds, nonprofit organizations and religious institutions.  In addition, there are hundreds of investment management firms that offer sustainable and responsible investing funds and vehicles including my company, Petaluma-based Sustainvest Asset Management, LLC.

How many SRI funds are there?
As of 2012, there were 333 mutual fund products in the United States that consider environmental, social, or corporate governance (ESG) criteria, with assets of $640.5 billion. By contrast, there were just 55 SRI funds in 1995 with $12 billion in assets.

What are the fastest growing areas of sustainable and responsible investing?
Alternative investments have become one of the most dynamic segments within the ESG investing space.  The number of alternative investment funds that consider environmental, social or corporate governance criteria has grown more rapidly than any of the other types of funds that US SIF Foundation tracked in its 2012 Report on Sustainable and Responsible Investing Trends in the United States. Alternative investment funds include social venture capital, double or triple bottom line private equity, hedge funds and property funds.

How do SRI funds perform?
Sustainable and responsible investing (SRI) spans a wide and growing range of products and asset classes, embracing not only public equity investments (stocks), but also cash, fixed income and alternative investments, such as private equity, venture capital and real estate. Like all investors, sustainable and responsible investors seek a competitive financial return on their investments.

What evidence is there that shareholder resolutions on environmental, social and governance questions have an impact?
Advisory shareholder resolutions are crucial tools for encouraging U.S. companies to address key environmental, social and corporate governance (ESG) issues. By filing resolutions, which may then proceed to a vote by all shareholders in the company, active shareholders bring important issues to the attention of company management, often winning media attention and educating the public as well. Moreover, resolutions need not come to a vote to be effective.

[Image credit:  Ahmad Nawawi, Flickr]

Dale Wannen, MBA, is President of Petaluma-based Sustainvest Asset Management, an investment advisory firm dedicated to integrating sustainable and responsible investing into client portfolios.  He can be reached at

Dale Wannen

Dale Wannen is President of Sustainvest Asset Management, an investment advisory firm focused on sustainable and responsible investing (SRI). Prior to Sustainvest, Dale was a portfolio manager at Harrington Investments and specialized in ESG investment strategies, securities analysis, and shareholder advocacy. Prior to this position, Dale was a financial advisor with UBS Wealth Management Services in San Francisco. He is often a guest speaker on the topic of ESG investing and shareholder advocacy.Dale has an MBA in Sustainable Management from Presidio Graduate School in San Francisco. He earned a B.A. in Economics from Rowan University and currently is a volunteer with Mentor Me Petaluma, Rebuilding Together Petaluma, and the founder of Green Drinks Petaluma.He also currently sits as Board of Director and Treasurer of San Francisco human rights organization, Global Exchange, teaches Economics for the Oakland non-profit Game Theory Academy and is a committee member for the National Resources Defense Council (NRDC) in San Francisco. Previous volunteer work has included Treasurer and Board Member for bird conservation organization, San Francisco Bay Bird Observatory (SFBBO), committee member of the Petaluma Pedestrian and Bicycle Advisory Committee (PBAC), and President of the Social Venture Finance Club at Presidio Graduate School.Dale currently holds the Series 65 FINRA license and has previously held the Series 6, 7, 63, 66 and California Life and Health Insurance Certification. He is a member of National Association of Professional Financial Advisors (NAPFA) and the Financial Planning Association (FPA).Dale lives in Petaluma, CA with his wife Lauri and their Malamute Shadow.