Why Not Just Invest in SRI (Socially Responsible Investing) Index Funds and Call It a Day?

According to the Forum for Sustainable and Responsible Investment, SRI (socially responsible investing) is an “investment discipline that considers environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact. Often SRI offerings avoid companies that derive profit from such things as fossil fuels, firearms, and tobacco.” This is a good start, but those filters, used by most SRI options don’t meet the 3P (people, planet, profit) criteria. For example, as of April 30, 2018 the top ten holdings in Vanguard’s FTSE Social Index Fund Investor Shares (VFTSX) were as follows:

1. Apple Inc.

2. Microsoft Corp.

3. Alphabet Inc.

4. Facebook Inc.

5. JP Morgan Chase & Co.

6. Johnson & Johnson

7. Bank of America Corp.

8. Intel Corp.

9. Visa Inc.

10. Wells Fargo & Co.

None of these companies follow business practices that I want my money to support. They all create product lines and marketing strategies that strongly encourage consumerism. Most of us on the path to financial independence (FI) are trying to reduce our consumption recognizing how much fulfilling life can be when we are NOT keeping up with the Joneses. I don’t want to invest in companies that persuade others to buy more stuff and be less happy.

The number one company, Apple, makes use of precious natural resources that have been extracted from our planet to create products that often become obsolete within a matter of years. Many people then throw these obsolete products in the regular trash so they end up in landfills despite the electronics recycling offered by many municipalities, not to mention all that initial packaging that was thrown away first.

Financial institutions like JP Morgan Chase represent another industry I prefer not to support. These businesses continually prove themselves unworthy of our trust and rely on predatory practices to generate profits. In general, I see few examples of companies that answer to shareholders prioritizing a triple bottom line that truly values people, planet, and profit equally.

Certainly, in terms of mainstream investing in the stock market, SRI options present the best opportunity for people to direct their money toward more sustainable outcomes, but these options still leave a lot to be desired. In recent years, there has been more talk about a SRI sub-category known as impact investing that I find more intriguing and promising in terms of allowing investors to obtain a triple bottom line. According to,

“Impact investing is investing that aims to generate specific beneficial social or environmental effects in addition to financial gain. … while the definition of socially responsible investing encompasses avoidance of harm, impact investing actively seeks to make a positive impact by investing, for example, in non-profits that benefit the community or in clean technology enterprises.”

I first heard of impact investing about ten years ago when I worked at a think tank in Washington, DC. At that time, the discussions I was involved with centered around using social impact bonds as a funding mechanism in the early childhood education sphere. I believe these social impact bonds tended to (and continue to be) issued by larger financial institutions for millions of dollars, which is all well and good but leaves the individual non-accredited investor out of the game.

Fortunately, in this next phase index investing has evolved into something individual investors can participate in with a smaller scale investment. My investigations into impact investing options to date has been limited. I will be looking into it further in the future to generate a discussion on this topic in future blog posts.

So what do you have to say about this???

Is anybody else turned off by the fact that so many mainstream companies that push consumerism and extractive practices are represented in the more common SRI offerings? Have you found SRI options that invest in companies or businesses that are more “socially responsible” than those in the typical SRI offerings? If so, please let us know by posting a comment below.

Personal Disclaimer 1) I admit to using products offered by a few of these companies, but I do it rather begrudgingly (hoping in the coming months, as I hold myself accountable to you readers of my blog, to terminate my relationship with at least one of the financial institutions on this list).

Personal Disclaimer 2) About 20% of my retirement investments are currently in TIAA’s Social Choice Equity Fund. I hope to learn from my readers and get ideas for how else to invest these funds when I move them to my self-directed IRA.

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  • Reply
    Cristy Abbott
    June 19, 2018 at 2:29 am

    I have no finances. Does that make me independent or dependent. I havent had monetary exchange of more than $200 since maybe Nov 2016.
    I have lived in exchange for services rendered. For some time I produced the food I ate, in community, we made it possible for several artist to live, laugh and create.
    I dont know if I was playing or working for most of the time I was in that capacity.
    When I think of Financial Independence, I think, that sounds like work, hard work, for someone else, for some thing else. For some one elses profit.
    When I see a bird flying free, eating another bird, I think that is freedom. When I see another bird dancing in a puddle on the ground, I think that is freedom. When I hear my friends say Financial Independence, I think they care not about this kind of freedom. Free to drink, eat and sleep on our planet for no exchange, other than thier capacity to survive.
    We humans have no right to this expectation, in my opinion, because of Financial anything/everything. Our exchanges are un natural, destructive and consumptive of natural resources, for which finances create.
    And there is Microsoft, Intel and Apple in my possession… So I fail to honor this opinion of my own… Blaming my hoodwinked, lemming habits on these choices.
    Dare I unplug and live wild… So un American…

    • Reply
      June 19, 2018 at 4:14 pm

      Thanks for joining the conversation, Christy. You bring up very good points, a number of which I hope to delve deeper into in future posts. The truly financial freedom of which you speak outside of our current or any I guess financial system is something I do think a good bit about. I’m an active member of my wonderful local time bank and in general do as much as I can sharing, trading, and salvaging to operate outside of the money economy I’ve read and been inspired by books about moneyless living highlighing the adventures of the likes of Daniel Suelo and Mark Boyle. I however, came to learn about these moneyless living options after having accumulated a modestly positive net worth.

      For medical and other personal reasons I have decided NOT to give away these monies I’ve saved and pursue the moneyless version of financial freedom, but to try and steward these funds in a way that encourages regenerative practices. I think the ideal of what I aspire to now is a modified version of the vision for financial permaculture outlined by Eric Toensmeier. While many exchanges of currency can lead to destructive outcomes for people and the environment, I also believe that currency (or energy as I prefer to think of it) exchanges can have positive outcomes, for example when a talented permaculturist is paid to share her knowledge with others.

      I appreciate and greatly respect your perspective and am grateful to you for commenting, which has prodded me to now state something that should be made clear to readers of this blog – While the option of living that moneyless version of financial freedom is an option some people are choosing to pursue, that is NOT the version this blog will focus on. I intend to look to Daniel Suelo, Mark Boyle, and others for ideas and suggestions to include in future posts. I created this blog though, to work with the baseline presumption that I (and other readers) want to keep (and likely increase) their net worths in ways that have a positive impact on people and the planet (and the presumption that there are currency exchanges that can happen causing less or no harm to people or the planet).

      Should you choose to do the unAmerican thing of unplugging and living wild I will be inspired by your adventures as well….

  • Reply
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