CMP Financial Planning

Investing in Socially Responsible or Sustainable Funds


 By Christina Povenmire, MBA, CFP®
According to the 2014 Nielsen Global Survey of Corporate Social Responsibility, more than half of consumers surveyed globally said they would be willing to pay more for products and services from companies committed to a positive social and environmental impact. And when it comes to investing, a recent Morgan Stanley survey found that 71% of respondents were interested in sustainable investing. Because of this interest we have recently been showing Dimensional sustainable fund investment options during our client meetings.
Dimensional has been providing investment strategies that incorporate social screens since 1994. Their Social Core Equity portfolios seek to hold securities that are consistent with each portfolio’s social issue criteria, for example, excluding revenues from such activities as gambling; selling tobacco, alcohol, or weaponry; producing and marketing pornography; and profits from companies that are known to use unfair labor practices; etc. Since 2006, additional socially screened and environmentally focused offerings have been created. Each strategy uses a data-driven approach to evaluate companies on a focused set of sustainability issues whose impact can be readily measured and reported, such as the impact of company emissions, including greenhouse gas and fossil fuel reserves.
The purpose of these funds is to allow investors to act on their personal values and philosophies through their investments rather than simply maximizing returns. These funds do have slightly higher expenses (6-8 basis points) and may underperform the market. At this time about 20% of our clientele are choosing these investment options.   It is a completely personal decision based on your values and goals! Let us know if you do have an interest in investing in these funds.