SRI or socially responsible investments have been growing in popularity over the past few years and that has been reflected in our writings over the last few months as it seems to become more important by the week.  We have touched upon many topics that are wide ranging but that share an underlying theme.

Change is the theme that resonates throughout the writings. ‘Yield cos’ are corporate structures that address the apparent need for financial vehicles that address the changing alternative energy landscape. Micro-finance structures cover many asset classes and their growth within the profit and non-profit world continue growth to address the changing needs inherent within the third world farming and green products communities.

Mutual funds that seek to invest without exposure to fossil fuel companies are responding to sweeping changes as well are ETFs that seek and index composition with less carbon impact. The products, firms and innovation is growing along side these changes.

There are challenges that accompany this change. SRI investments are still considered by many investors to lack performance legitimacy and to be to opaque to be able to truly define “socially responsible”. We agree that to some extent there is a lot of interpretation with regard to what constitutes socially responsible.

It would be reasonably easier if one simply did not want something in their portfolio such as tobacco or big agriculture but what if an investor wanted a fully diversified portfolio that addressed their ethos and was calibrated to quality Environmental, Social and Governance factors? This is a massive challenge for the majority of wealth managers who have millennials as the next wave of inherited wealth.  How will they be able to service and cultivate those relationships that ask for more than a traditional balanced portfolio?

It becomes even more complicated as the wealth grows and the interests become much more specific such as a desire to allocate 50% toward true impact investments. Will most firms have the capacity to deliver thoughtful solutions within the early stage green tech or organic farming space?

The preparation for the massive wealth transfer to the next few generations and the investment needs will be challenging but most likely rewarding to those who anticipate beyond the next quarter. We look forward to aiding in your preparation.


Tom Koehler-CIO

“Socially Responsible Investments represent a complex asset class and while we covered a small amount, there is a lot more information needed prior to making an investment decision. Let us know if we can provide more information to help in that process.”