One of the Whatcom County Executive Office’s goals is “to improve the vitality of our community.” That vital force is powered by our community members and the choices we make. Many of the toughest decisions involve compromise, but fortunately a vital community can include both thriving business and a healthy environment. Our recent contentious election has brought these issues to the forefront here and across the country, raising awareness and generating discussion, albeit not always civil. Walt Whitman once said, “Other lands have their vitality in a few, a class, but we have it in the bulk of our people.” I believe this applies to Whatcom County. We have a vocal community, supporting a wide range of social, economic and environmental issues. Bellingham might be the city of subdued excitement, but once we have our coffee, we become a lot more lively.
We can have impact in two ways. One, with our actions and good examples. Community leadership with respect and our quiet every day choices. Two, we can have an impact with our money, which is the focus of this article.
Money is a tool that can be used to weigh choices and vote with our wallets, all within the context of our social, economic and environmental goals. This includes choices around what we buy, the businesses and institutions we support, the non-profits we give to and considering the societal and environmental impact of our money habits. These decisions can impact the vitality of our community.
Sustainable Investing is Thriving
As a Financial Advisor in Whatcom County, we are seeing more interest in how investment portfolios can sustain a healthy environment and support social values. This type of investing is often called Socially Responsible Investing or Sustainable Investing. Traditionally, it involved screening out the “bad” companies such as those that sell alcohol, tobacco, and firearms. Now, Sustainable Investing has evolved into a process where instead of screening out investments, you also search for the companies that meet your positive criteria. This is known as ESG, investing for companies that are vital to our Environmental, Social and Corporate Governance principles. These themes are relevant to Whatcom County where we live in natural beauty, have local healthy food options, where we support local businesses and have a strong voice for equality.
Sustainable Investing is gaining popularity and there are more investment choices available across a broad range of selection criteria. These include investments that focus on:
- Impact Investing. Seeking investment opportunities that can produce social or environmental benefits.
- Thematic Investing. Investing along themes such as alternative energy, religious values, fossil fuel divestment and others.
- ESG Investing. Selecting for companies that exhibit leadership in environmental policies, corporate culture, minority participation and in other areas, whether on an absolute basis, or relative to their peers.
The US SIF released their 2016 Report on US Sustainable, Responsible and Impact Investing Trends and found that there is now $8.7 trillion invested in this field in the United States, an increase of 33% since the 2014 report.1
What to Consider
Sustainable fund performance remains a question mark. Recent studies have suggested that selecting investments using sustainable screening criteria can generate outperformance, but many sustainable investment funds also come with higher expenses.2 Skyline Advisors believes that investors should consider performance, expenses, risk as well as the sustainable strategies we want to support before making an investment.
Sustainable investing comes with caveats. It often excludes many energy and industrial related companies, and includes a lot of technology and healthcare, losing some diversification and potentially increasing risk. Another challenge are the myriad individual beliefs of investors. For example, many consider Starbucks to be socially responsible. They focus on green supply chain management and purchase Fair Trade Certified™ organic coffee and use sustainable materials in their stores. But many investment funds exclude them because they also sell alcohol and they compete with local coffee shops. You decide.
Perhaps the biggest misconception investors have is that they think that when they buy shares of stock in their ideal sustainable company, that they are directly supporting that company’s sustainable efforts. That is rarely the case. When you buy stock on a stock exchange, you are buying from another person just like you who was willing to sell their shares at the price you offered. In other words, you are almost always buying stock from another individual, not from the company itself. But, sustainable companies do reap the reward of higher stock prices. More buying means higher stock prices, which allows companies to issue new stock at that higher price, raising capital to reinvest back into their sustainable business practices.
Have an Impact
A vital community requires thriving business, living wage jobs and promotes good stewardship of our resources. Our money has an impact and an increasing number of investors integrate sustainable practices into their investment portfolios as part of their financial impact strategy. Skyline Advisors wants to support these efforts.
Mark Wallace CFP® AIF® CRPC® is a financial advisor at Skyline Advisors, a locally owned and operated Registered Investment Advisor providing money management and financial planning services. Skyline Advisors is located at 405 32nd St., Ste 201 in Bellingham and at www.myskylineadvisor.com
This article is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Skyline Advisors and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Skyline Advisors unless a client service agreement is in place.
- US SIF Foundation, 2016.
- Morningstar “Are Sustainable Funds More Expensive?” By David Kathman 3-16-2017
Morningstar Magazine “The State of Sustainable and Responsible Investing” By Jon Hale Feb/March 2017 Issue