Impact Investing: Aligning Values with Investments

Kristin B. Poole, CFP® MIB, Senior Financial Advisor

With the recent ad campaign that highlights Colin Kaepernick, we can see a continuing pattern of large corporations’ increasing involvement in social issues. In 2017 we saw Audi’s Super Bowl commercial in support of equal pay for women; in ’16, Target’s decision to offer transgender-inclusive bathroom access in all its stores; in ’15, Chick-fil-A’s stance against catering for a same-sex marriage. Now with some consumers buying or burning Nike shoes it is evident that people are increasingly leveraging their buying power as a tool for expressing their values. As a wealth advisor, my attention turns to Impact Investing, or what has also commonly been known as Socially Responsible Investing.

The way consumers leverage buying power with businesses that do or do not align with their values is not a choice made merely to impact the profitability of a specific business, it can also be an expression of values intended to capture the attention of business leaders. Recent conversations I’ve had with friends and clients demonstrate to me that buying shoes or cars in the wake of a corporate statement of political relevance reflects a desire to amplify individual voices, choices, and beliefs through dollars. That power of amplification can make alignment with a political statement more influential to business leaders than individual customer opinions.

The increasing relevance of such statements demonstrates the importance of not only allowing but honoring meaningful conversations with investors about how Impact Investing can strengthen a portfolio and financial plan. A recent U.S. Trust poll of high net worth investors showed that 41% of men and 63% of women said social, political, or environmental concerns were “somewhat” or “extremely” important to their investment decisions.1

The conventional advice from advisors that investors should merely make money in the market and donate to causes they care about is becoming stale for two important reasons. One, there is compelling evidence that Impact Investing does not automatically mean there will be lower returns as was once assumed. Two, money is a means to an end, a tool to keep our families safe and healthy, to create opportunities for future generations, and to spend quality time together.

If your financial plan is not crafted in a way that aligns your finances with your values, then can your plan and portfolio be better customized? I encourage investors to consider exploring this question with their advisors.

1 Forbes, July 5, 2018, “Demographic Trends Are Driving Demand For Impact Investment – And The Industry Is Starting To Adapt.”

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