INVESTING
CENTERED WEALTH PORTFOLIOS:
Our approach to designing your Centered Wealth Investment Portfolio integrates your Centered Wealth Plan, life interests, social screens, risk tolerance, and investment objectives. Once your portfolio is invested, the investment strategy is reviewed regularly and adjusted for performance and risk management. When appropriate, we also incorporate alternative asset classes to add greater diversity to the portfolio.
The overall goal of our integrated approach to investment management is to better connect your core values and investment goals with specific investments in your portfolio. We find that the results of this Centered Wealth approach are that clients experience greater inspiration, peace of mind, and sense of empowerment in relation to their money.
SOCIALLY RESPONSIBLE & IMPACT INVESTING:
Sustainable, Responsible and Impact Investing (SRI), also referred to as Socially Responsible Investing, influences positive change in the world through investment screening, shareholder advocacy and direct impact & community investing.
At Centered Wealth we are dedicated to furthering our expertise in these three applications of SRI. We believe they are key to both building Centered Wealth for our clients and enhancing the common good.
Investment Screening is purchasing only those stocks that meet personal ethical requirements. Doing this in concert with other investors impacts corporate behavior worldwide. Screening is based on ethical attributes which include issues such as Environmental stewardship, positive Social practices and corporate Governance (ESG).
Shareholder advocacy uses the voice of stockholder ownership within a company to affect specific corporate policy. Through our relationship with Vanderbilt Financial Group we participate in both specific and global shareholder advocacy movements on behalf of our clients.
Direct Impact & Community Investing directs capital to companies demonstrating cost effective and innovative solutions in the sustainability sector. We do this through educating clients on the appropriate investment vehicles to reconnect individual investors with their communities.
From Idea to Action: Sustainable, Responsible and Impact Investing and the Growing Green Economy
Just what is at the heart of the enthusiasm surrounding SRI? We believe it is that investors are coming to understand that investing in the marketplace is a creative act, a vote for the kind of world we want to live in. In 2020, about 55% of American households have some form of stock ownership [1]. The implication of this ownership is encouraging. Stockholders, driven by the principles of SRI, are more empowered to realize the ideal of participatory capitalism at the level of the common stockholder. Today, the three primary tools deployed by the SRI industry are: portfolio screening, shareholder activism and community/impact investments. Judging by the numbers the SRI movement is catching on. At the end of 1997, roughly $1 trillion was invested under the banner of SRI. As of year-end 2019 $17.1 trillion was managed according to sustainable investing strategies, that is one third of all assets under professional management. [2]
Portfolio Screening
The practice of portfolio screening utilizes both negative or avoidance screening and proactive, positive screening when selecting specific companies for investment. Avoidance screening has been the dominant practice, avoiding companies whose policies are not consistent with the investor’s values or ethical standards. Nuclear power, weapons manufacturing and animal testing are a few examples of avoidance screening used by SRI investors [3]. Perhaps, the most powerful historical display of how avoidance screening can affect real social change was its contribution in ending apartheid in South Africa. Through the practice of divesting from international corporations doing business in South Africa, investors financially penalized the stock prices of these companies and thereby contributed to weakening the political and economic case for apartheid. The corporate consequences of unethical or amoral business practice can be very high. Positive screening on the other hand involves the proactive inclusion of sectors or company products and practices that fulfill the investor’s values and ethical standards while remaining consistent with their investment objectives.
Shareholder Activism
Shareholder activism takes the SRI investor into an advocate role. With $3.47 trillion of muscle, SRI coalitions are able to spotlight issues and sponsor shareholder resolutions for reform. An example was a resolution sponsored in 1997 by Progressive Asset Management, a nationwide network of SRI investment consultants, to inspire the Disney Corporation to change its practice of using sweatshop labor. Coalition building around this issue resulted in 11% of the proxy vote going in favor of the resolution and the company adopting a code of conduct for contract suppliers. The growing use of shareholder activism holds tremendous potential in supporting public corporations to establish life-supporting and sustainable business practices.
Community Investing
Community investing builds on the principle that change begins in your own backyard. Over the last several decades, SRI funding into entities such as Community Development Financial Institutions (CDFIs), as well as community development networks such as the Business Alliance for Local Living Economies (BALLE), has contributed to the growth of community investment channels within the SRI industry [4]. This rewiring of the investment landscape represents a constructive rebalancing in the flow of investment capital from Wall Street to Main Street. The passage of the 2012 Jumpstart Our Business Startups (JOBS) Act is a recent example of the positive evolution in this community investment trend. Given that the majority of Americans work for non-public businesses within their communities, an increase of community investment is likely to lead to greater community vitality and economic resiliency [5].
SRI and the Big Picture
The real work begins when you put the idea of SRI into action. Is avoidance social screening enough, or are shareholder activism and community investing attractive options to you? Building a well-rounded investment portfolio involves balancing the trade-offs between performance, risk, and ideals. Ultimately, this is a very personal equation crafted through careful thought and selection.
In the quest to build a more environmentally and socially just world, it is critical that we as investors understand that our investment dollars have impact and are a vote for the kind of world we want to live in.
ALTERNATIVE INVESTMENTS:
Alternative investment options are key in building portfolio resilience. We accomplish this by seeking appropriate investments outside the box of traditional stock, bond, and mutual fund markets.
These include:
Professionally managed futures
Real estate – private REITS and direct limited partnership interests
Commodities
Foreign currencies (including foreign currency denominated bonds)
Domestic municipal bonds, tactical options, trading accounts
Tax credit driven investments (typically placed in the low-income housing and renewable energy sectors)
Physical precious metal depository services
Direct Participation Programs
Resources:
Burgess, Robert. “The Most Important Number of the Week Is $25.6 Trillion.” Bloomberg.com. Bloomberg, June 12, 2021. https://www.bloomberg.com/opinion/articles/2021-06-12/the-most-important-number-of-the-week-is-25-6-trillion.
“Sustainable Investing Basics.” The Forum for Sustainable and Responsible Investment. Accessed October 7, 2021. https://www.ussif.org/sribasics.
“What Are the Principles for Responsible Investment?” PRI, December 1, 2017. https://www.unpri.org/pri/what-are-the-principles-for-responsible-investment.
Common Future. Accessed October 7, 2021. https://www.commonfuture.co.
Shuman, Michael. Local Dollars, Local Sense: How to Shift Your Money from Wall Street to Main Street and Achieve Real Prosperity. White River Junction, Vermont: Chelsea Green Publishing Company, 2012.