How to Kick Coal Out of Your Portfolio
Have you been watching the trend of institutions and cities divesting from coal? Are you wondering how you can get in on the action?
As it turns out, it’s not that hard for any of us to divest. Dale Wannen was on hand to tell us how to do just that at a recent Women in Cleantech and Sustainability event, “Kicking Coal out of Your Portfolio.”
Doing well while doing good
But when it comes to your hard-earned money, it’s not just about coal, and it’s not just about divesting. You can also control where you invest — with a number of socially responsible options now available.
Judging from the size and diversity of the crowd at the WCS event — people of many ages were in attendance, as well as more men than usual — these days, people are concerned about where they put their money.
Dale hears this a lot from clients who enlist his company, Sustainvest Asset Management, to manage their money. You don’t have to be rich to take part. Even if you don’t play the stock market, you probably have at least one 401(k) or IRA. Whatever your situation, you have choices these days.
What’s more, you don’t have to sacrifice — you can do well while doing good. That’s right: socially responsible funds are on the rise. The Domini Social Index, Dale told us, is even outperforming the S&P 500.
This aligns with the rise of businesses that are showing that the bottom line of green is black. Dale gave the examples of Costco and Chipotle, who are both leaving their competitors in the dust while incorporating more sustainable business practices. While few (if any) companies can be said to be really pure, it’s striking to see the effect of even some amount of better business practices.
The power of numbers
While Dale used large companies as examples, it turns out that we also have a lot of power as individuals. Not only can we each choose where we put our money, but we also have the power of numbers. We’re talking large numbers: 52 million American workers are active 401(k) participants, with $4.4 trillion in retirement plans as of 2014.
That’s a lot of money, and can add up to a lot of power.
Sustainable and responsible investing
Enter sustainable and responsible investing (SRI). What’s SRI? Quite simply, an investment discipline that considers environmental, social, and corporate governance criteria to generate long-term competitive financial returns and positive societal impact.
If SRI sounds good to you, Dale recommended a few steps:
- Determine where you fall on the personal risk profile. Obviously this is very individual and depends on a number of factors in your particular situation. And it’s important to determine this to inform your investment decisions.
- Learn about asset classes, which are groups of securities that share similar characteristics and regulations. Then check the asset classes against what’s in your fund, to see how you’re currently invested compared to how you should be.
- Invest in funds that fall under the SRI criteria within your asset classes.
A couple tips for finding companies and funds to invest in:
- To determine which companies are good options within a sector, you can do personal research on sites like Corporate Knights Top 100 or Green Century Funds, or pay for research from CSRHUB, IW Financial, or MSCI reports.
- To find a list of sustainable funds, check the Forum for Sustainable and Responsible Investment.
Of course, if you’d rather enlist a pro to do this work for you, there are always companies like Dale’s.
No time like the present
Whichever route you take, this is a good time to start thinking about divesting. With the deadline for 2014 IRA contributions coming up on April 15, there’s never been a better time to start doing well while doing good.
Rosana Francescato is Director of Communications at Domino, a concierge service that’s helping millions of Americans get off fossil fuels and save money at the same time. She’s on the boards of Women in Cleantech and Sustainability and Everybody Solar, as well as the steering committee of the Local Clean Energy Alliance. She’s been the top individual fundraiser at the GRID Alternatives Bay Area Solarthon five years in a row.