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Twenty years ago, few could imagine an all-digital world. Back then, visiting a stockbroker was like going to the supermarket – it’s just what one did if she needed to purchase stock or get financial advice. And then something revolutionary happened: Cyberspace opened its doors. Now, in the second decade of the 21st century, we’re experiencing a second revolution, a digital revolution with a new awareness of the environment. It’s a revolution that makes shopping for things like groceries or even investment advice online look like child’s play.
While capitalism continues to drive the world economy, more and more investors are turning to the Internet to make socially responsible investment decisions. Visiting an ambitious stockbroker or ill-advised financial advisor has been replaced by visiting websites like Mint.com and CNN Money. Here, investors get the scoop on all things investment-related, including an in-depth look at how “going green” makes financial sense. Through these digital information portals, investors who utilize Sharebuilder.com or Schwab.com (two of the many online investment platforms) are armed with resources to make responsible decisions that were before available by appointment only
Along with information portals, asset management and investment firms are jumping onboard the online craze with sustainable investment options. Trillium Asset Management is a firm that manages portfolios and financials for foundations, non-profits, and individuals. The firm has as its focus an integrated ESG (Environmental, Social, and Governance) approach. According to Farnum Brown, the firm’s Chief Investment Strategist, Trillium “rigorously integrates ESG … factors with traditional investment metrics in the stock selection process.” In other words, Trillium helps its clients make smart investment decisions that benefit not only in dividends but in practices that encourage environmental awareness, human rights, diversity, and consumer protection.
Socially responsible investing (SRI) is a rapidly expanding business in the United States, and not just for companies like Trillium. Assets held in ESG-focused portfolios mounted $2.71 trillion in 2007, an increase over the $2.16 trillion in 2003 according to the Social Investment Forum’s 2007 Report on Socially Responsible Investing Trends in the United States. Today, more than one of every nine dollars invested by U.S. firms or individuals is in socially responsible funds.
While going green with your investment strategy may seem like a dividends-killing move, there are many companies that are both socially responsible and profitable. Covanta, a renewable energy supplier, is one of those companies. By transforming garbage and biomass into usable energy, Covanta advances smart ESG principles; the company is also quite profitable and has a loyal customer base. Firms like this are proof that even the conservative investor’s portfolio can incorporate sustainable options.
Overwhelmingly, two issues are of key concern to investors now: technology and environmentalism. By refusing to invest in stocks that do not meet their standards, firms like Trillium are making it clear that sustainability is a key issue for investors who use their ownership in companies to influence corporate attitudes toward environmental and social issues.
Sustainable investment will continue to develop in large part through the Internet. As new technology spreads from developed nations to less-developed countries, social investments will grow. Many companies, particularly those with global operations, are now publishing sustainability reports on their websites. Investors turn to these sites when deciding where to invest. As Brown points out: “Eventually, we won’t even [have] ESG factors. They’ll just be things that smart investors and able corporate managers pay attention to.”