Doing Good Can Be Enriching

By Julie Neitzel

The common perception is that investing in socially responsible ways would result in sacrificing investment returns. But socially responsible investing has evolved to a large, growing universe of investment funds associated with environmental, social and governance factors, with nearly $4 trillion under professional management.

Expensive SRI investment solutions have been replaced with many fund options rated for ESG adherence, with competitive annual investment fund expenses and market returns. Further, there is an emerging investment adviser community specializing in educating and guiding investors who wish to incorporate values into their investing activities.

It seems logical that companies effectively applying sustainable business practices perform better and become more successful over the long term. ESG ratings measure business areas such as energy efficiency, resource management and pollution control for the “E”; worker health and safety, working conditions, stakeholder relations and reputation for the “S”; and transparency, accounting and audit quality and appropriate board structure for the “G”. In many ways, these areas identify best practice applications for well-run companies.

Interestingly, in 2012 a study by Osmosis Investment Management concluded that a group of companies meeting energy efficiency standards beat the MSCI World Index annually over an eight-year period. Further, several years ago, Morningstar initiated a fund rating system with social criteria that identified higher performing investment funds employing a societal good filter.

Today, there are more than 80 million millennials – generally, those born between the early 1980s and the early 2000s. They’re often described as a philanthropic generation, no longer accepting the “greed is good” mantra. Based on Spectrum research, more than 45 percent of them want their wealth to enable positive societal impact and more than 70 percent (under age 32) have used their investment decisions to express and address their social, political and environmental concerns.

Further, a recent U.S. Trust study concluded that more than 91 percent of high net-worth individuals donated to charity during 2015 and plan to give as much or more in the following three years.

Given those two groups’ momentum in “doing well and doing good,” this investment sector will continue expanding with values-based programs, ESG-rated funds and more-evolved impact programs.

It is possible to transition existing investment portfolios into values-aligned portfolios with thoughtful guidance and process. The following might be considered with the adviser supporting the family through this process: investor understanding of the specific values-alignment areas; development of a policy statement that incorporates investment, financial and impact goals and themes; determination of expected investment results including concessionary (due to investment costs or excluded sectors due to values alignment) or market returns; evolution or timing of the current holdings into a values-aligned portfolio, with regular review of portfolio holdings to determine investment, financial and values-based results.

A values-based investing approach can provide an opportunity for deeper identification of one’s own values and how to integrate them more broadly into investing activities, charitable giving and other areas. Growing demand by investors and their advisers will result in continued innovation in investment products that are competitive and can expand one’s ability to enable doing well by doing good.

Julie Neitzel is a partner and adviser with WE Family Offices in Miami and a board member of the Miami Finance Forum. Contact her at or 305.825.2225.

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