By Janet Brown
Your investments have power. How you invest your money can be a vote for the values you want to support — from fairness and equality to safety and sustainability. But how does it actually work? How do your mutual funds try to make difference in the world?
There are three strategies that mutual funds have been using for years:
Divestment is still an important tool, but most investors want to do more than just avoid ‘bad apples.’ They want to actively support companies that are trying to do the right thing.
When you invest in a company, you get a say in how that company operates: You can file shareholder resolutions to try to change how a company operates; you can vote on these proposals at shareholder meetings; and that’s exactly what many funds do. They invest in a company with the goal of engaging with the company and helping it do better.
Here are just a few of their success stories:
Fewer harmful chemicals in children’s products: Domini fund managers engaged with Target to encourage the company to reduce the use of toxic PVC plastic in children’s products. (Other major retailers, like Walmart and Sears, soon followed suit.) Today, Target has a sustainable product standard that scores 7,000 products based on toxicity.
More efficient energy use: Calvert funds has prioritized engagement with electric utilities, and 53 major corporations have committed to source 100 percent of their power from renewable energy in the next two decades.
Smarter use of natural resources: Trillium engaged with Home Depot, which was one of the world’s largest retailers of old-growth lumber at the time. Home Depot agreed to use more sustainably-sourced wood. And by 2009, Home Depot had sold more Forest Stewardship Council (FSC)-certified wood than any other company in North America.
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Janet Brown is the President and CEO of FundX.Janet joined FundX in 1978 and has been researching mutual funds and developing successful investment strategies ever since. A frequent guest on national media, Janet’s expertise is widely recognized. She is a board member of several non-profits and foundations and a longtime advocate for sustainable, responsible investing (SRI).