Responsible Investing Requires Action
Across the spectrum of people I encounter, from quite wealthy to not at all wealthy and young to old, there is despair about the current role of money in the world. As one new client recently said to me, “I guess I believe that capitalism is irredeemably evil.” That isn’t an easy thing for a financial advisor to hear, but it is a real sentiment for many of us if we give our despair a voice.
The main problem I have with that statement is not the “evil” part, but the “irredeemably” part. There is no ownership, no responsibility, and no active participation in that statement. And only those of us who live with enough privilege to ignore the impact that money has in the world can make such a statement. We all need to take concrete actions to change the way money does damage to our fellow humans, the planet, and all of the living entities that share it with us.
ESG (environmental, social, governance) investing has become a big topic recently. When I began as an ESG investor in the early ’90s, it was then called Socially Responsible Investing, it was considered something only for the hopelessly naive. In 2004, when I started my investment advisory career, we were just beginning to see the statistics that prove investing with a moral compass can do just as well as—or even better than—traditional investing. Today, large institutional investors have picked up the banner of ESG.
However, some newcomers are missing the original intention of the movement: to change capitalism itself from the inside out. It isn’t just about buying into companies that are being responsible corporate citizens and selling companies that are not. It is about showing up at shareholder meetings and putting forward resolutions that enforce new corporate behavior. It is about calling upon legislators to outlaw private prisons after you have divested from them personally. It is about urging the State Board of Investments to move out of fossil fuel investments, especially in companies violating the rights of sovereign nations in our own state.
It is not capitalism that is evil, it is human behavior. And human behavior can change, at the individual level, the government level, and the corporate level. But it takes an entire community to stay engaged and use the tools we have, including our investments, to their highest calling.
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