Aligning Investments and Values
Even before the 1971 founding of Pax World fund – the first socially responsible mutual fund in the United States – many people have wanted to make a difference with their dollars. The question remains, is there a practical way of aligning investments and values?
In the early days of socially-responsible investing (SRI), most of the strategies revolved around excluding “sin stocks,” primarily those associated with alcohol, tobacco, and gambling. The list of exclusionary stocks grew in the 1980s, adding oil and gas companies in the wake of disasters like India’s Union Carbide gas leak and the Exxon Valdez oil spill.
SRI has since evolved into an inclusive investment strategy with active management and deep research into companies that claim to be good corporate citizens. The emphasis is now on investing in companies with high marks for environmental issues, societal responsibility, and corporate governance (ESG).
The idea of influencing positive change in society through our investments is a noble pursuit. The premise of developing an ESG framework to analyze how a company measures up against its peers can provide a more holistic understanding of a company to complement its financial data.
There are obstacles, however, to obtaining good ESG data. Many companies are reluctant to add more data to their already long list of legally-required reporting and disclosures. Another problem is “greenwashing” – using public relations and advertising tactics to convey a more environmentally-friendly and socially-conscious image than is accurate. Plus, a standardized ESG rating system doesn’t exist; environmental issues, societal responsibility, and corporate governance have different weightings and levels of importance in each industry and to each investment analyst.
Historically, well-run companies with a holistic operational approach have always been a good long-term investment. As more companies begin to disclose accurate ESG metrics that can be more-rigorously applied to the investment process, companies with good ESG scores will ultimately attract investment dollars and prosper.
By most measures, the economy is running hot. But even the casual observer can’t help but notice a strong economy can come with a down-side. Inflation is becoming more and more obvious, as we fill our gas tanks and are alarmed by higher prices of everyday items like groceries. Inflation had been for many years an afterthought, but now it is getting more mainstream attention as we all keep an eye on inflation.
As the end of 2021 approaches, anyone with a flexible spending account (FSA) should check the balance. If there are remaining funds, make a final trip to the drug store, dentist, or eye doctor. Keep reading for a year-end FSA reminder and important update.
Being cautious about fraud schemes can help keep you and your finances safe. To help you uncover fraud, here are a few common scams occurring today.
In December 2020, the $2.3 trillion Consolidated Appropriations Act 2021 became law and several provisions from the earlier Tax Cuts and Jobs Act were extended. Income tax brackets, eligibility for certain deductions and credits, and the standard deduction for income-tax payers all saw increases in 2021 as a result. Following is another important 2021 tax planning update.