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Good investments

Investing your money in line with your morals can make a real difference in the world—and still benefit your bottom line

By Scott Alessi

Early in his career as a financial advisor, Brian K. Speers (JD ’93) recalls meeting with a couple who expressed a unique concern about their investments. Rather than asking about profits, the couple wanted to be sure that their money wasn’t going to support products that they were morally opposed to, such as alcohol and tobacco. At the time, Speers says, it was an unusual request.

“Twenty-five years ago, most people said, ‘I want to make money,’” says Speers, managing director – wealth management, senior financial advisor at Merrill Lynch and a member of Loyola's Board of Trustees. “But over time, people have looked more and more at what the companies inside their portfolios are doing.”

For Speers, who was recently named to Barron’s list of America’s Top 1,200 Financial Advisors, the growing concern among investors about where their money is going has become a key part of his work. As an expert in the area of impact investing, Speers shared a few tips on how socially conscious investors can get the most out of their money.

What is impact investing?

The big umbrella here is socially conscious investing, and this is a broad concept that can be broken down into two areas. One would be socially responsible investing, where you don’t want to buy into a company that is against what you believe in—a company that makes firearms, for example. The other, impact investing, goes a little bit further. In impact investing you’re looking to invest in companies or projects that potentially can create a positive economic, social, or environmental outcome. In short, this is about either “do no harm” (socially responsible investing) or “make a difference” (impact investing). What’s important is that people are looking at more than just the profit and loss statement when they make an investment. They are looking at how these companies align with their underlying values, beliefs, and desires for the future for the world.

Is it difficult to find companies that fully align with an investor’s values?

This gets to the gray area of the topic. You can say you only want to invest in companies that are developing sustainable energy, and that’s a great idea. But you can’t say you’re just going to invest in a company that has no carbon footprint because a lot of times the companies that are effectuating change have all sorts of different businesses.

Let me give you an example. There is an electric and gas utility company that is probably one of the largest producers of solar and wind electricity in the United States. They have made a huge commitment to sustainable and green energy. However, this is a large utility company that also generates power using natural gas and nuclear energy. So it is not as easy as saying, “I want to effectuate a change by investing in a green company.” You may have to say, “How far am I willing to go to get this done?”

How can an investor navigate those complex issues?

The first thing you have to do is figure out who you are and what you believe in. If you say you want to make a positive change, each person is going to have a different view of what that means. So understanding your values and understanding the investing world as a whole is very important so you can get an idea of what changes you are hoping to effectuate.

The other important thing is monitoring the company—what is it doing, what products is it putting out, what research and development is it doing? I think it is also very important to look at the management team and the board of directors. Ask yourself what they have done over their careers, what they have done in other areas of the business world, and how closely attuned their values are to yours.

Can these kinds of investments still yield good returns?

Effectuating change in society can be extremely profitable and provide clients with incredibly good returns. These aren’t mutually exclusive ideas.

Obviously the financial basics are the financial basics. We want to buy companies that are growing their earnings. But I think if you are careful, or if your advisor is careful, you can accomplish both goals: get great returns and effectuate changes in society while upholding your values.

But I can’t stress enough how important capital is and how important profits are. A company may be 100 percent aligned with your values, but if they don’t have the capital or ongoing funding to actually get to the end result, they may not be around in five or 10 years. That’s why you have to be so careful when investing in this area to have a clear idea of what your values are and how you can put those into practice without losing your money.

Can you give an example of the kind of company a socially conscious investor might consider?

One of the investments we’ve made for our clients is with a major global food company. About two years ago they made a decision to invest about $1 billion in finding ways to make foods that have less sugar, less fat, less salt—all the things people are concerned about to make sure they’re eating right. This company put the money into research and development and they’ve found a way to make chocolate with 40 percent less sugar. So if you are concerned with changing the way we consume food, here is a company that is doing that.

Now this is one of the largest global food companies, so they may also be putting products out on the market that your moral compass isn’t entirely aligned with. But who else could come up with a billion dollars to develop something like this? It is oftentimes the larger companies in these industries that have the capital to invest in new ideas that can be important for change to our society.

Can one person’s investment choices make a difference?

When you buy a share of stock you have a vote to cause change at the company. I know people say, “I own one share of stock so my vote doesn’t matter,” but it does. You can vote for the board of directors members that are aligned with your values. You can vote against decisions the company may be proposing that you don’t think are correct not only for the company’s future but society’s future. And the ultimate vote is that you can take your money out of that company.

People can also be a lot more vocal today through social media to influence other investors, so if a company is not doing the right things and it is publicized very quickly, they are going to see a flow of money out of their company. And corporate America doesn’t exist to go out of business, so I think that company would change very quickly.

What advice do you have for someone who wants to try impact investing?

I would say you have to do three things: have a moral compass and know what your values are, know how much you are willing to give and take on certain issues, and treat your investment as a vote to make sure the company stays in line with your values. Then you find a company that also meets all of the quantitative things—growing their earnings, growing their cash flow, etc.—that also matches your set of values. I firmly believe that if you do this correctly, you can not only make a good profit but improve society in fundamental ways.