Socially responsible investing, A to Z
November 17, 2016 10:25 AM   Subscribe

I have my money invested in conventional mutual funds, in a Wells Fargo account. I have a checking account with Citibank, and a credit card with Chase. I want to move my money into more socially responsible* funds, in more responsible financial institutions. I'd like recommendations on the following:

(1) Socially responsible mutual funds (or other investments), and guidelines for selecting among them. (I understand that actual investment advice is beyond the scope of AskMeFi - just some names and general direction would be helpful.)

(2) Socially responsible banks or credit unions offering low-fee checking accounts and/or credit cards (I'm in California, but open to any bank or CU with national and online service.)

(3) Socially responsible brokerage houses (to hold my socially responsible investments). I'm having a harder time with this: E.g., even Pax World appears to use State Street, which appears to be just another big bank.

(4) Any other wisdom would also be appreciated, including identifying any issues that I haven't raised here.

*I understand that "socially responsible" is open to interpretation. Comments on that are welcome also, although it's not my main concern. (Any bank that's not currently invested in the Dakota Pipeline is probably better than what I've got now.)
posted by anshuman to Work & Money (14 answers total) 9 users marked this as a favorite
Calvert was the most well-known set of funds when I researched this a few years ago. For them, "socially responsible" meant advocacy as well as selective investing, although they did have some selectivity about which investments they chose.
posted by amtho at 10:51 AM on November 17, 2016

I looked into socially responsible investing and found the returns were minimal and the fees high. I know that others I have talked with disagree on this so don't take my word. Do your own research.

1. Forget mutual funds. Buy an S & P Index ETF (exchange traded fund). You will be paying the least amount in fees to Wall Street and you will have more money to give to those causes you care about. Don't forget that unless Republicans eliminate capital gains tax: you may have a tax liability if you sell off your mutual funds.

2. Credit Unions are always a better choice and usually open to the public. Maybe one that services teachers or some other group that you support?

3. You have to use some brokerage; just pick one that charges the lowest for transactions (I use Fidelity). Tell the broker assigned to your account that you do NOT need investment advice. Instead, get a certified financial planner who charges a flat fee and does NOT work for a brokerage.

4. You may be able to find "socially responsible" ETFs but you might be sacrificing greater returns. Unless you want to invest in particular companies, I think investing wisely without the fees and BS that comes Wall Street is the best method.

Volunteering to help with those causes you believe in goes a lot farther towards helping than where you have your money.
posted by jabo at 11:01 AM on November 17, 2016 [2 favorites]

I invest in Vanguard FTSE Social Index Fund Investor Shares for this purpose.
posted by rabidsegue at 12:15 PM on November 17, 2016 [1 favorite]

Like jabo I looked into socially responsible investing and decided against it; if you do decide to go that route, don't take the word of the mutual fund companies, do your own research and look up the top 10 holdings. Many 'socially responsible' funds don't invest in defense, tobacco, or alcohol stocks, but everything else is fair game- for example, here are the top 10 stocks in Vanguard's social index fund:

1 Apple Inc.
2 Alphabet Inc.
3 Microsoft Corp.
4 Johnson & Johnson
5 Facebook Inc.
6 JPMorgan Chase & Co.
7 Wells Fargo & Co.
8 Procter & Gamble Co.
9 Pfizer Inc.
10 Bank of America Corp.

Here is Calvert's list: (almost the same)
Apple Inc 3.30%
Alphabet Inc Cl A 2.95%
Microsoft Corp 2.52%
General Electric Co 2.06%
Facebook Inc A 2.03%
Johnson + Johnson 1.98%
Amazon.Com Inc 1.96%
Procter + Gamble Co 1.76%
Wells Fargo + Co 1.45%
Pfizer Inc 1.28%

Whether these companies represent socially responsible investing to you is up to you.
posted by matcha action at 12:43 PM on November 17, 2016

I know that Ledyard Financial Advisors (part of Ledyard Bank) offers the option of socially responsible investing strategies for managing your money. (So I assume that some other financial advisors probably do this as well).
posted by gudrun at 12:49 PM on November 17, 2016

matcha: Calvert says that, rather than maintaining a hard line about whether a company is a "perfect" investment socially, it is only somewhat selective in its holdings and then uses its position as a shareholder to advocate for change. Given that its rate of return isn't that bad, if you're going to be in a mutual fund, at least with the Calvert funds you're part of something that's advocating for positive change.

When shareholder votes come up, other funds may feel a compulsion to vote only for best financial return. At least with Calvert, the fund managers have a clear duty to advocate for positive social policies.

If more people invested with the fund, the fund would have even more power.

Here is their page about shareholder advocacy.

Here is their most recent shareholder resolutions with companies in which they invest, including nine positive outcomes. For example, "Fresh Del Monte will report on water risk and water risk management in its own operations and in its supply chain." - this seems to be as a result of a resolution that Calvert introduced.

More about how they have engaged companies on environmental responsibility.

(Imagine if everyone on Metafilter got together and bought a majority share in Microsoft or something.)
posted by amtho at 12:58 PM on November 17, 2016 [1 favorite]

New Resource Bank is a California bank with very high ethical standards.

For larger scale financial management, FIM is one I frequently recommend to my clients. Their motto is "put your money where your heart is".
posted by ananci at 5:05 PM on November 17, 2016 [1 favorite]

A bunch of non-binding resolutions isn't worth the extra 25 bps you pay for calverts screened sp500 index fund - especially when it's underperformed the underlying index pre-fees while the last five years should have favoured the underlying quality bias in their investing style.

Their actively managed portfolio is like an advertisement for passive investing.
posted by JPD at 4:13 AM on November 19, 2016

If there's a better-yield, less expensive fund that accomplishes even this much, please let me know about it.
posted by amtho at 8:39 PM on November 19, 2016

They don't accomplish anything. That's the point. Just buy an index fund from vanguard which is at least a mutual.
posted by JPD at 8:58 PM on November 19, 2016

They do, though. They probably give more power to environmentally-minded people within the companies, for one. And non-binding resolutions (are you sure they are all non-binding?) affect what seems "normal", and normalization is important. Finally, it may be that Calvert is introducing resolutions and being a bit of a gadfly in a way that other parties would like to but don't feel it's their "place".

Real change doesn't happen solely by forcing other people to do things. It happens bit by bit, people's perceptions of what is possible and normal shift, and then you have changes that are durable and deeply rooted.

Also, more shareholders in the funds would give the funds more power, so that they could accomplish more.

Finally, you're comparing holding the Calvert fund to holding a higher-yield fund and measuring success by dollars alone. For some very ethical investors, the choice would be between Calvert and a regular savings account, and success would be measured by whether there's any point in having or spending money in 30 years' time. It doesn't do any good to have dollars in the bank if the world is messed up enough.

Even if the environment isn't completely destroyed, having the world be less fair, clean, and safe is not something that can be compensated for with individual wealth.
posted by amtho at 8:16 AM on November 20, 2016

I mean look. I understand how the process works. The fact that Calvert isn't even trying to proxy poorly behaved boards is all you need to know. I could get the board of a lot of companies to agree to non-binding resolutions on non controversial topics.

The point is you are paying a lot for this service - and they aren't doing anything remotely interesting other than making you feel a bit better about yourself.

And I'm not comparing this to other active funds. I'm comparing their index product to a market index product.

There are so many things wrong with the active product, it itself is unethical.
posted by JPD at 3:19 PM on November 20, 2016

I have had the same dilemma. My though has been to hold my nose when a fund is my only choice, and if I want to build equity and do well is to help a family or person become a first-time homeowner by being a silent partner - this is a decade-long process with people who have a foundation of trust.
posted by childofTethys at 1:58 PM on November 21, 2016

Make the switch to a Credit Union, at least! Shared branching means that you can treat most physical CU locations and ATMs as interchangeable if you travel/move, regardless of which specific CU your account is with. (My current primary account is with a CU that's close to my old job, but I now do about half my rare in-person banking with a recently-opened branch of a different CU that's closer to home.)

When I lived in the Sacramento area USE was my primary CU and I quite like their account terms and customer service, though it looks like they may not have LA locations.
posted by sibilatorix at 9:48 PM on November 21, 2016

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