Here
is the occasional feature from the Center for the Urban Environment
(CUE). In this submission, CUE staff interviews Lily Scott (pictured here) who works as an associate
at Veris Wealth Partners researching and implementing investment portfolios for
institutions, high net worth investors and individual clients. In a related
event, CUE will be hosting another event on the economy, “Being Your Own Pied Piper: How the Song of Local
Business Will Save NYC’s Economy” at CUE’s first "Third Thursday" forum at 6pm on October
16^th to discuss the current economic crisis and
how businesses can use strong community relations and environmentally
responsible practices as capital. The event will feature Carl Hum, Brooklyn
Chamber of Commerce; Michael Muyot, CRD Analytics; Jennifer Stokes, Myrtle
Avenue Brooklyn Partnership; and Park Slope’s very own Catherine Bohne, Park Slope Community
Bookstore. For more information, click here.

CUE: Let’s begin
with the bottom line— what does socially
responsible investing mean?

Scott: Socially
responsible investing (“SRI”) is the pursuit of financial return on
investment, encouragement of corporations toward corporate social
responsibility and the search for tangible “social” return through
investment options.  These investment options include screening
(divestment), shareholder advocacy, community development and
microfinance.  For individual investors, SRI involves the identification
of personal values, and the subsequent alignment of these values within an
investment portfolio.  This process of value discovery and implementation
can be complicated and time consuming, but also deeply rewarding for an
investor.

CUE: Markets are very
much on people’s minds these days. What are the financial returns on socially
responsible funds? What are the different investment options—does it
matter what fund I select?

Scott: While a
fund’s performance is significant and based largely on the skill of the
management team, diversification of an overall portfolio is paramount.
Diversification (including securities from different asset classes in your
investment portfolio) moderates portfolio risk and volatility.  There are
many SRI mutual funds available for very low minimums – socialfunds.com
is a great resource – and, in addition to mutual funds there are
separately managed SRI accounts, alternative SRI investments and direct SRI
investments.  Market cycles by definition are finite—so an eye on
long-term performance and diversification are vital to SRI investing.

CUE: Does socially
responsible investment manage for climate change—and how does that work?

Scott: Yes.  As
Amory Lovins of the Rocky Mountain Institute has proven, climate change has
resulted largely from using energy in ways that are economically inefficient.
Because of climate concerns and in the name of increased shareholder value, the
private sector is contributing most to reversing the problem of inefficient
fuel use by committing to a reduction of carbon dioxide and equivalents.
SRI’s tendency toward investment in companies with lower emissions and
use of alternative technologies directly contributes to climate change
solutions, and turns out to be fiscally responsible as well! 

CUE: Say I wanted to
invest in affordable housing, small businesses, and responsible development in
my local community—would I write my check to you or a local
nonprofit—or both?

Scott:  Financial
advisors are highly informed about the investments they recommend, however,
there are certainly benefits to doing it yourself. At Calvert Foundation (the
non-profit arm of Calvert) investors can direct their community investment, and
consequently their social impact, through sector and geographic selections (the
account minimum is only $1,000).  Interest (~0%-5%) and principal are
returned at maturity—which can be as little as one year.
Furthermore, there are mutual funds which direct a portion of their portfolio
towards community investment.  However, if you are highly informed (i.e.
understand the impact of your investment: How much of your donation goes
towards administrative costs?  What are the tax advantages? Etc.) and are
not concerned with financial return on investment, a donation to a local
nonprofit is a great avenue for making a direct impact in your community.

CUE: Demographically
speaking, are there any patterns in who chooses to invest in this way?

Scott: Emerging
innovative industry trends (e.g. venture capital, hedge funds, SRI) tend to be
researched and committed to by institutional and high net worth investors;
thereafter, a broader range of individual investors are able and willing to
gain exposure to the asset class or trend.  SRI is no different.
According to socialinvest.org, at the end of 2007, approximately one out of
every nine dollars under professional management in the US was involved in
SRI—that’s 11% of the $25.1 trillion in assets under
management.  This figure means that the expansion of market-rate
opportunities makes it easier for all to be successful socially responsible
investors—from screening to shareholder advocacy to community investment
to microfinance.      

Lily Scott graduated from
Bates College in 2006 with a degree in Anthropology.  She has worked at
Cambridge Associates and now works at Veris Wealth Partners.

Interview conducted by Rebeccah
Welch—Associate Director of Public Affairs at the Center for
the Urban Environment. As a guide to a more sustainable New York City, the
Center is dedicated to educating individuals about the built and natural
environments. For more about our work visit www.bcue.org.