Wall Street is evil.
Recent movie villains aren’t zombies. Instead, they’re evil corporations destroying alien planets, drug-using sleaze balls screwing investors and Gordon Gekko being Gordon Gekko.
The past several elections had strong narratives from left-leaning politicians promising to rein in the power of Wall Street for the good of America.
Whether you agree this should happen, many people refuse to invest their savings because they don’t want to support large corporations.
What if I said you can still invest money for your future while supporting companies that make the world a better place.
The answer is socially responsible investing.
The Forum for Sustainable and Responsible Investment, the US SIF, defines SRI as “an investment discipline that considers environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact.”
This means investors only invest in companies with positive societal values, like social justice and green production, and refrain from investigating in companies producing “sin” goods like tobacco and guns.
More and more companies fit this definition every day. Today, many companies’ brands stem from socially conscious practices — think Whole Foods, Ben & Jerry’s and TOMS.
SRI isn’t a new trend, though. The first recorded instances of SRI come from the 1700s when investment groups refused to fund companies taking part in the slave trade.
With generations X and Y becoming CEOs and attaining high management positions in the business world, and Generation Z — arguably the most socially-conscious generation since hippies — entering the workforce, the values placed on sustainability and equality practices in the commercial world will continue to increase.
Studies show millennials are 79 percent more likely to purchase a company’s product after discovering the company’s socially responsible practices and are 45 percent more likely to refuse a product when finding out a company in not socially responsible, according to the Cone Millennial Cause study.
Wall Street is taking notice of this trend.
In fact, in 2013 one in every six dollars under professional management (that’s more than $6 trillion) was invested in an SRI strategy, according to the US SIF. It’s expected for this amount to keep rising.
Think of a company you admire for its socially-conscious mission. Then look up if you can buy stock and invest in them.
If stocks confuse you, there are hundreds of SRI focused mutual funds you can easily invest in.
A quick Google search for “SRI mutual funds” will bring up plenty of results for you to look at.
I can hear the jaded finance majors right now, “But Jay, SRI limits your investing opportunities and will result in less returns.”
I had the same view before writing this column, but after looking at the evidence, I changed my mind.
According to TIAA-CREF Asset Management, comparing the five most popular socially responsible investing indexes to other indexes including the S&P 500 and Russell 3000 resulted in no statistical variance.
In other words, investing in socially responsible companies should make you the same amount of money as normal stock investing in the long run.
I hope by now you see you don’t have to sacrifice financial performance to invest socially responsible.
I strongly urge you to look up mutual funds specializing in SRI and begin investing for your future and the future of the world.
Jay Cranford is a 21-year-old finance senior from St. Simons Island, Georgia. You can reach him on Twitter @hjcranford.