Investment Strategies with Aileron

By: Bill and Cindi Porter, AILERON INVESTMENT ADVISORS

Q: How can I invest in a socially responsible manner?

A: There are two major options. Investors want to make money with their investment dollars, but many also want to remain true to their social philosophy as well. The first choice in pursuing that double agenda is to invest only in mutual funds which exclude stocks from certain industries such as tobacco, alcohol, oil, etc. There are many such funds.

The second choice, “impact weighted accounting,” is a newer concept introduced by Ronald Cohen. If a company makes a product but also pollutes a river in the process, both the positive and negative financial factors are accounted for before the “profits” are established.

Cohen chaired a study at Harvard Business School that published the environmental damage of 1,800 companies. It revealed that 252 of the companies created more environmental damage than corporate profits.* That is a societal loss – not a profit. Yet the stocks of many of those 252 firms performed very well.

Some companies are designing their products to align with social responsibility. Tesla is a good example. Its battery-powered vehicles may reshape the auto industry if enough consumers feel that is a worthy goal. In October 2020, at the annual meeting of Procter & Gamble, two-thirds of the shareholders voted against management because of deforestation associated with the production of some of its products.

While the investment choices for companies who have been valued on a “impacted-weighted” accounting basis is small compared to the number of mutual funds that exclude certain industries, the number is growing. Investing in companies whose products target solutions for societal problems such as pollution, deforestation, and other negative factors might offer investors more upside than by simply excluding certain industries from a portfolio.

The future is coming. Your trusted advisor should help you invest for it.

This is for education only. Before using this information in any way discuss it with a financial professional. There are many risks associated with stock trading. You may lose some or all of your financial investment. Securities offered through Dempsey Lord Smith, LLC Member FINRA/SIPC. Securities offered through Integrated Financial Planning Member FINRA/SIPC. Advisory services offered through Dempsey Lord Smith, LLC. All the information in this letter is published in good faith and for general information purposes only. We do not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information is strictly at your own risk.

Send your investment questions to: submissions@SuwaneeMagazine.com.

All the information in this letter is published in good faith and for general information purposes only. We do not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information is strictly at your own risk.

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