The 3 main approaches for “values” alignment come in one of 3 forms:1) Positive screens; 2) Negative screens; and 3) Advocacy approach. First, there are positive screens or support, or seeking others that promote and help similar type causes. In broad terms you may invest and support companies that sell positive products; for example … educational materials, safety products, products for the renewable energy sector, or products that are necessities of life (such as food, clothing, electricity, water or housing). It may also include policies and practices as it relates to energy, environmental, social and community issues.  Perhaps the alignment is based on faith and religious affinity. Secondly, there are negative screens or harms, or the avoidance of companies based on how they engage with industries that go against your values assessment (examples: tobacco, or arms trade). This often is not a black and white issue, but rather a “gray area” in the degree of harms.  Implementing strict screens may not tolerate more than 1% of the revenues originating from activities such as slavery or usury, while another approach may limit a wider range of activities not to exceed 10-15% of revenues.  Today there are tools to dig deeper with better vision of what is there and how to address the specific values of each person or nonprofit values as it relates to screening harms.  For example, a Catholic Values approach may focus its strict screening process on financial investment activities affiliated with abortions and pornography, whereas they may not screen as intently for investments associated with alcohol, tobacco or gambling activities.  Another faith group may choose to screen for gambling and usury at the top of their values list, and not screen for abortion and pornography investments.  Do not be fooled by the labels of mutual fund marketing; rather, get clear on the values you wish to screen first, and then check them out. However, do not be surprised if you get fooled by an investment’s label or package. This is why it is crucial to target investments that align with your values so you are not influenced by a good marketing pitch.  Get your holdings assessed for YOUR values. And lastly, you may utilize an advocacy approach or engagement, which is a proactive way to improve on values and utilize money.

This can be accomplished in several ways.  An advocacy approach can be applied through governance of proxy voting, or through the writing of corporate resolutions.  Many advocacy groups have been highly effective and successful in effecting policy changes without a corporate resolution simply by engaging into conversation over an issue. It relies on using shareholder rights and effecting real change.  Seeking to effect social, environmental or ethical issues is not new and seems to be growing exponentially in the past few years.  Social Investment Forum has a tremendous amount of stats to back this up. Advocacy can take place without any positive or negative screening. And, here are a few examples of advocacy issues: executive compensation, climate change and bribery. One example of a proxy service is Egan-Jones and here is their website for reference http://www.ejproxy.com.

Another part of the engagement or advocacy process would be to vote for impact investing or ethical investments.  These take on many forms of investments from Program Related Investment (PRI) to Community Notes to Microfinance to loan funds or mutual funds investing into loan funds.  Some are providing cash flow in the form of loan interest and others in the form of equity investments. Researching online search for impact investing or ethical investments will yield an overwhelming bounty of information.  So, if you are looking for some help in this process, we can help you address various options on this important topic in future writings … because how we invest our resources does matter.