Real Good, Feel Good, Investing

I’ve gotten tired of my “progressive” friends looking at me like I’m a traitor. Just because I am in love with Wall Street, doesn’t mean I am in love with Bail Outs.

Not all investing is “bad”. In fact, there’s a whole world of socially and environmentally responsible investing that encourages corporations to improve their practices on environmental, social issues. And the world of SRI is growing even while the economy is shrinking. SRI makes up an estimated $2.71 trillion out of $25.1 trillion in the U.S. investment marketplace today, according to the Social Investment Forum.

And last month, right here at the University of Michigan, four MBA students in their early thirties launched their own socially conscious venture capital fund, the “Social Venture Fund”. I couldn’t agree more with one of the founders, Luis Calderon:

“People think making money has nothing to do with generating social impact,” said Gilad Meiri, co-founder of the fund. “There is no program that deals with this. Now, we can study, promote and educate this amazing idea of for-profit socially conscious business leaders.”

Your money can be your most powerful weapon. When you choose to buy that diet coke instead of the Odwalla, you are choosing to support Coca Cola Corporation – for better or worse. When you chose to invest in Exxon over North Face, the same goes. But there is a misperception that if you want to make money, you have to support the “bad guys”.

“People think there’s an inherent tradeoff for investing for a social return,” said Calderon in a recent interview “We want to find whether a tradeoff really exists, but we also want large returns.”

Well look no further, Calderon: according to studies in peer-reviewed journals and elsewhere, SRI performs about the same as any other type of investing.

Track records of socially responsible stock market indexes prove this.  For instance, “theDomini 400 Social Index averaged 8.4% annually from 1990 to 2008, compared to 7.8% for the Standard & Poor’s 500 Index over the same period. In Canada, the Jantzi Social Index averaged 2.4% annually from 2000 to 2008, compared to 2.8% for the S&P/TSX Composite Index,” according to Forbes‘ Investopedia.

I’ll update you soon on which “real good, feel good” socially responsible investments I think are really worth it.

*In the meantime, check out these Socially Responsible Investing Facts.