Gauging the State of Socially Responsible Investing in North Texas and around the U.S.
By Teresa McUsic
Who’s ready to put their money where their mouth is? Increasingly, Americans are — though the trend of socially responsible investing has not necessarily caught on in North Texas (for an example of some of the passion that is out there, see our commentary from local green business and SRI advocate Mitch Fine last year.)
Socially responsible investing or SRI shot up 13 percent during the Great Recession, according to the latest figures from US SIF, an association for the SRI community. More than $3 trillion--or one in eight investment dollars — is now under management using this investment strategy, which seeks to combine returns with social good.
“This is not just a trend, but clear evidence of a growing SRI investment discipline,” said Alya Kayal, director of policy and programs for US SIF.
Yet local financial planners are not seeing much interest in SRI among their clients.
“Most people don’t know what their dollars are invested in,” said Dennis Carpenter, a certified financial planner and president of International Wealth Management in Grapevine. “Most pastors don’t even know.”
Steve Blankenship, a CFP and principal at Heritage Financial Planning in Grapevine, said in the past five years he’s had “maybe one” local client ask him about socially responsible investments.
“There’s not a tremendous demand for it in DFW unless you bring it up,” Blankenship said. “But I have clients in California, Colorado and Austin who want it.”
Mary Anne Mayer Redmond, a certified financial planner in Addison (who is also on the board of Green Source DFW) said she purposefully tries to steer clients to at least consider SRI.
“It’s a personal conviction in a sense for me to make SRI available and test their interest and openness to it,” she said. Because of her efforts, around 60 percent of her client base have put at least part of their investments in SRI funds, she said.
Nationally, brokerage houses are seeing a growing trend. Today most of them offer SRI mutual funds or separate asset accounts, said Kayal. In all, SRI mutual funds have increased from 55 funds with $72 billion in assets in 1995 to 250 funds with $316 billion in assets by 2010, she said.
Dave Corbin, a Fort Worth-based asset manager, said one quarter of the $166 million in his portfolio is in SRI securities his firm has researched and screened. The biggest growth in this investment strategy has been in plans for government employees and religious and university endowments, he said.
Kayal said 25 states and a number of cities now offer an SRI option through their deferred compensation plans. Many global companies, like Hewlett-Packard, also offer SRI options to their employee retirement plans.
Defining SRI can be tricky, however, Corbin said.
“We’re one of the few firms in the country with clients who are very progressive and very conservative in terms of ideology and political affiliation,” he said. “SRI in one sense is like beauty--it’s in the eyes of the beholder.”
Corbin said his firm, which only takes clients with $1 million or more in assets, ranks 10,000 companies in eight categories of social responsibility. Screens include avoiding companies that manufacture or sell gaming machines, alcohol, tobacco or weapons, and utilities that use nuclear power. Corbin also screens out companies who work with countries with human rights violations, use animal testing on their products or have bad records on employee relations, the environment, or citizenship.
“We screen for social characterization first then apply financial methodology,” he said. “Most others do the opposite.”
The big question for SRI is what kind of returns it gets as an investment strategy.
Corbin said SRI has paid off for his fund. “We have found SRI has a recognized performance because companies that typically meet SRI are seen as being higher quality,” he said. “How they are run is how they treat their people, for example.”
In spite of its relative infancy and lack of strong history, Mayer Redmond is among those confident that SRI will continue to become more prevalent in the marketplace. “It’s going to take a team to make some waves here,” she said. “But with all the wealth and goodness in Dallas, there’s a lot of possibility for SRI here.”
Socially Responsible Investing Resources:
- SRI Mutual Fund Performance Chart at www.ussif.org. Shows financial performance, social and environmental criteria analysis through 14 screens and other information for around 150 mutual funds.
- Mutual Funds Guide at www.socialfunds.com. A free 20-page guide on investing in socially responsible mutual funds.
Sign up for the weekly Green Source DFW Newsletter to stay up to date on everything green in North Texas, the latest news and events. Teresa McUsic is an Arlington-based writer focused on consumer, environmental and health issues for a number of local and national publications. Her column, The Savvy Consumer, appears in the Fort Worth Star-Telegram. She can be reached at TMcUsic@aol.com