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Written by: Peggy Haslach

Lately, when I have had conversations with my clients, we inevitably wander off and end up on the topic of what is happening in the news. Most of my clients are doctors, veterinarians, and pharmacists, so they consider themselves lucky because their jobs are essential. They tell me how they feel bad about the number of people who have lost their jobs and have had the sobering realization that our recent crisis has been a triple pandemic of COVID, job loss, and social injustice for communities of color. They want to do something to help. Joining the protests is not possible, especially for those that are on the front lines battling COVID. And for that same reason, they are not ones who can order food from minority-owned restaurants 7-days a week.

Financial Advising for doctors

Yes, we are in a unique situation, but these conversations are not new. They have been going on for years when people have wanted to put their money behind social and environmental causes or make sure they are not supporting companies who manufacture guns or pollute water sources. That is when we start talking about using their savings and investment dollars to help companies trying to do things that they believe are good and not supporting those companies in businesses that go against their values. That is when we start talking about SRI, ESG, and impact investing.

I am saying it this way for a reason. When you mention SRI, ESG, and Impact investments, too many people, including investment advisors, get this idea of liberal progressive types trying to save the environment or promote some socialist ideas. When in reality, the SRI movement spans a broad political and religious spectrum.

Let’s break that down. First of all, SRI stands for Socially Responsible Investing. Meaning, investments are screened using social, ethical, or environmental criteria, and information gets used to make investment decisions. SRI also includes shareholder activism and community economic development. Most of us think of SRI as excluding companies involved in companies that produce things like guns, tobacco, and alcohol. It also means including companies who are working towards sustainability, social justice, or ethical conduct objectives.

That is where the ESG part comes in. ESG or ESG integration stands for Environmental, Social, and Governance. Companies get screened, and the ESG data is used by financial analysts who rate the companies, including or excluding from the investment portfolios.

People are often surprised to hear that many historians believe Socially Responsible Investing dates to the 1700s when John Wesley, one of the founders of Methodism, outlined the basic tenants of social investing in his sermons. He preached that members should not invest in businesses that could harm your neighbors like the “sinful” companies that produced guns, liquor, and tobacco. Other historians cite the Quakers, who, around the same time, prohibited members from buying or selling slaves.


Modern SRI started in the late 1960s, and 70’s when socially responsible investing took on the political topics of women’s rights, civil rights, labor issues, and divesting in companies who funded the war or the apartheid government in Africa. But some funds were still based on religious values. The first SRI mutual fund, The Pax World Fund, was started by two men, Luther Tyson and Jack Corbet, who had worked on peace, housing, and employment issues for the Methodist Church. Unfortunately, because these investors were using “social” criteria over “profit-driven” criteria, SRI was at odds with conventional investing. Many of the traditional institutions were outspoken critiques of the movement. Nevertheless, people were becoming concerned with social issues, and SRI was a way they could support these issues.

In the 1990s, SRI became synonymous with sustainable investing as environmental concerns took the forefront. In other words, the “E” in ESG became a hot topic. The “S” became the little sister. People do not understand that E, S, and G are very tightly interwoven, and many of the social and governance issues are related to environmental issues. For example, most toxic waste sites are located in or near communities of color. The triple pandemic we are experiencing shows us that many of the issues we are dealing with today are social economic and involve social injustice. And as a result, we are seeing more shareholder activism as companies are hearing calls to address systemic racism and divest in companies connected to mass incarceration, private prison, the money bail system, and prison labor.   


So, if you feel you want to invest in companies that align with your values, you can do that through SRI, ESG, and impact investing. I know what you are going to say, “But wait. I have always heard that SRI is expensive or that the funds do not perform.” I have heard that too, and there are investment advisors who will not offer them. Their arguments are baseless. A recent article in WealthManagement.com counters this argument and even goes as far as suggesting that our fiduciary duty demands that we consider including ESG investments. I will say one thing; it pays to ask. I am getting reports back that investment advisors are looking into these funds as they see an increase in the number of requests.  

The fact that SRI has now taken on the “sustainable” aspect is where the future is heading. Data is starting to show that companies that protect the environment, cultivate diversity and inclusion, and have ethical businesses are profitable and sustainable. In other words, companies are doing good because it is good for business. Because of that, we see the market share for SRI and Impact investing increasing at a rapid pace. The market share for SRI/ESG grew to $30 trillion in 2018 and could reach $50 trillion in the next two decades.

Sound great, right? Before you jump in, let’s talk a little bit about how you can get involved. First, who may be interested in SRI, ESG, and Impact Investing? Yes, SRI, ESG, and Impact Investments appeal to progressive types who are concerned about the environment and social issues like gender equity, LGBTQIA rights, and racial equality. And recently, some options are screening for companies that are profiting from the prison system. But don’t forget where SRI began. There are still alternatives that screen for alcohol, gambling, guns, and other faith-based issues. So, it is identifying those issues you want to support or exclude with your investment dollar.

Next, we need to talk about where you can find advisors who can help you. As I mentioned above, Not all advisors offer SRI, ESG, and impact investments. There are several reasons for this. First, there are still some advisors who do not feel they are a good investment. It is going to be hard to change their minds if they are always of the belief that these funds do not perform. Second, some advisors do not have the licensing or access to a broker/dealer who will limit their access to these funds. Third, some companies are not adding new funds. Instead, they add measures such as sustainability ratings that let you know how a fund compares to other funds. For example, Morningstar evaluates investments and then scores them by using globe icons. A low ESG risk score will get five globes, and a high ESG score will get one globe.

Sustainable investing

Which option is best for you? If you are beginning to save, screening your funds using the Morningstar ratings is an excellent way to dip your toes while you build your investment portfolio. If you are a DIY type, there are some retail Index Funds and Mutual Funds available through brokerage accounts. And if you want an investment advisor to help you select the funds you have in your portfolio, there are plenty of options available. They can choose from funds that are turnkey models with low entry points or select funds with higher minimum entry points and volume discounts (breakpoint discounts) to build personalized portfolios. Whatever your investment experience is, you will want to work with an advisor who will make sure that the funds they are suggesting for you are suitable investments for you and will design the portfolio based on your risk tolerance, time horizon, and tax treatment needs.

Think of it this way. Remember when Hybrid cars first came out? They were very expensive and were not a good option for many families. Then we started seeing cars become more fuel-efficient and models that had reduced emissions or PZEV. These were an excellent option for the price, and families were able to feel good about the cars they were driving. Now we see electric or hybrids vehicles that are small and reasonably priced and those that are pricey. And we even see some big SUVs with two hybrid batteries that get 8 miles to the gallon on premium gas. There are lots of options out there, and the best way to find out what is best for you is to work with a salesperson that can help you find out what is best for you and your driving needs.

You can do that same thing with your investments. If you want to do better, you can invest in companies that are socially responsible and align with your values. It is possible to save, invest, and feel good about what you can do with your money.



SRI/ESG and Impact investing involves the risk of loss, including total loss of principal.  Consult with your investment advisor before implementing an investment strategy or making any investment decisions.








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