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By Liza Horvath


Investing for Impact


“Sustainability has gone from a nice-to-do to a must-do,” Steve Howard, Chief Sustainability Officer, IKEA


Although socially responsible investing has been with us for a very long time in various forms, it came to the forefront of most investor’s minds in 1982 when Trillium Asset Management was founded and devoted its investing exclusively to sustainable and responsible companies.


At that time, socially responsible investing became a buzz word and investors would frequently instruct their managers to keep their personal money out of “sin stocks” – companies that made guns, tobacco or alcohol. While certainly a good first step, responsible investing became less interesting as dissention among money managers became pervasive because of the perceived “negative impact” the restrictions were having on portfolio performance. As a result, and particularly during and after many of us sustained significant loses in our investment portfolios as a result of the recession, responsible investing criteria got sidelined in favor of making money on our investments – at all costs.


But what does “at all costs” really mean? Can we, in good conscience, invest in companies whose sole focus is bottom line profit while pollution, employee rights and sustainability are ignored? Thankfully – we collectively say “no.” According to a 2012 study by the Forum for Sustainable and Responsible Investment, “values-based investing now accounts for $3.74 trillion or roughly one in every eight to nine dollars under professional management.”


The California Public Employees’ Retirement System has a stated goal of moving 100 percent of their investments to companies that meet certain standards and when a company that has $244 billion dollars of investable assets makes a statement like this – people notice. But what are the standards that CalPERS is looking for in the companies in which they invest? Not just bottom line profit, but triple bottom line profit which means not only should the company show a monetary profit, but the company must also be committed to environmental and social responsibility. Environment, social and governance commitment - referred to as ESG - is becoming a new must for many investors. Institutional investors and savvy individuals alike are saying no to companies that lack this commitment and yes to companies that provide “green collar” jobs and who respect the environment, treat employees well and are also fully accountable for their actions.


Smart investors know that a company committed to these three forms of capital is also sustainable and, after all, if we are going to invest our money, let us invest in a company that feels not only a responsibility to us – but to our children and grandchildren as well.


Many seniors worry that once they are gone, nothing of “significance” will remain by which they will be remembered or that will continue to have a positive impact on future generations. Investing our money in companies that not only do well on the bottom line but that also do “good” on a global scale is an investment in our future. It is true that the company may not bear your name, but you will feel a sense of pride and responsibility when it produces products in an environmentally responsible manner or provides services that will be of benefit all.

Liza Horvath has over 30 years experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a questions call (831)646-5262 or email liza@montereytrust.com










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