Who Wants to be a Responsible Millionaire?

It’s hard to feel sorry for Jeff Reifman—he’s a former Microsoftie who, for lack of better information on investment choices, was forced to agonize about the most socially responsible way to salt away his millions.  But his recent Seattle Weekly article is a useful primer for those struggling with synching their money decisions and their values. Because, as Reifman points out, it’s pretty darn confusing.

He explains the various ways that socially responsible investment (SRI) firms choose their investments and the compromises they make (“there’s no such thing as a perfect company,” says one manager); and gives pointers on investment depending on how much change you’ve got—and what kind of change you want to see. A surprise to me was that some SRI companies actively work with corporations to improve their behavior, providing even more “change” value per dollar invested.

SRI funds do have weaknesses (notably, diversification), but over the long-term they might be even be more profitable than traditional funds--see this news bit on the Winslow Green Growth fund--because they hold companies with fewer long-term liabilities.

The theory of SRI funds is that these are corporations that minimize behavior that can negatively impact their businesses, so they are less vulnerable to loss due to environmental degradation, increased regulation, or litigation. For example, a logging company that doesn't plan to mitigate its impact on the environment might later get sued for causing soil erosion and flooding—or it might run out of trees.

P.S.: Northwest institutions highlighted are ShoreBank Pacific (a Portland-based community bank), SRI firm Portfolio 21, and Cascadia Revolving Fund, which loans to “underserved entrepreneurs, small businesses, and community-building organizations.” And the Social Investment Forum is a good general resource on SRI.