VERO BEACH –The following is a piece written by John D. Orcutt Jr., Vero Beach Branch Manager and Senior Vice President/Investments with Stifel, Nicolaus & Company, Incorporated, member SIPC and New York Stock Exchange.
“Many Treasure Coast citizens generously support numerous thriving local non-profit organizations that provide social services, health care, cultural activities and environmental benefits. Such generosity may have a positive impact on our community and the quality of life we all share. There are growing numbers of endowments, non-profit organizations, foundations, pension plans and individual investors that I believe have realized they can not only make a positive impact through giving, but also by directing their investment dollars according to their personal values.
This type of investing is called socially responsible investing (SRI), but is also referred to as: ethical, sustainable, socially conscious, mission, responsible, “green,” or impact investing. Generally, the SRI investment process not only examines traditional financial analysis, but also integrates analysis of environmental, social, and corporate governance (ESG) factors of a corporation in pursuit of enhanced long-term returns.
Historically, socially responsible investing has highly impacted some of society’s most publicized cultural revolutions. SRI history dates back to the 1700s, church congregation members were urged to avoid “sinful” companies involved in tobacco, liquor, gambling and guns. Social and cultural change in the 1960s and 1970s raised attention to social, environmental and economic problems that brought about serious discussions about corporate and investor responsibility concerning these issues.
Consequently, universities, faith-based organizations, and foundations started questioning the “social appropriateness” of where they invested. Later in the 1980s, SRI played an important role in ending apartheid in South Africa. Since, SRI practitioners have become involved in environmental issues, corporate governance, transparency of political contributions, supply chain operations in emerging markets, human rights, toxic chemical use, alternative energy, water resources and numerous other issues.
Early SRI practices were primarily based on negative screens or elimination of investment sectors or securities from an investment portfolio due to some environmental or social criteria. Today, SRI practices encompass a wider array of more proactive approaches, including: corporate engagement, shareholder activism, positive investment in companies believed to offer strategies or a positive social impact or community investment strategies.
There are a growing number and variety of SRI investments to choose from across most asset classes, including alternative investments. However, not all SRI investments are created equal in their evaluation process. Some SRI strategies may be more in line with one’s personal values than others.
According to the Report on U.S. Sustainable, Responsible, and Impact Investing Trends 2014 (U.S. SIF; The Forum for Sustainable and Responsible Investment), there are over 400 mutual funds, 20 exchange traded funds, and over 200 separately managed accounts incorporating environmental, social and corporate governance (ESG) criteria in their investment evaluation process. Total U.S.-domiciled assets under management using SRI strategies have grown substantially over the years, from $2.29 trillion in 2005 to $3.74 trillion in 2012 to $6.57 trillion in 2014, and account for about 18% of all U.S. unvested assets.
Philanthropic dollars are making a difference in the lives of many. Socially responsible investing, or directing one’s investment dollars according to one’s values, may also impact the world to be a better place for present as well as future generations. The relatively rapid increase in dollars committed to a socially responsible approach to investing and the wide variety of socially responsible investment options available across most asset classes enable one to use their investment dollars to impact the world while pursuing their investment objectives.”
ABOUT THE AUTHOR
John D. Orcutt Jr. is Vero Beach Branch Manager and Senior Vice President/Investments with Stifel, Nicolaus & Company, Incorporated, member SIPC and New York Stock Exchange. Orcutt has worked in the financial services industry in Vero Beach for 30 years. In March 2009, he joined Stifel, a wealth management and investment banking firm, with the opening of their Vero Beach office. He has served on a number of nonprofit and municipal advisory boards, including the Pelican Island Audubon Society, Ocean Research and Conservation Association and the Audubon Florida Board. He also has served as chairman of the Environmental Learning Center and the Indian River Land Trust boards as well as on the audit committee for the Indian River County School Board, the Indian River County Land Acquisition Advisory Committee, the Environmental Control Hearing Board of Indian River County and the Beach Advisory Committee for the City of Vero Beach. He can be contacted in the Vero Beach office at 772.299.4967.