I had the opportunity last week to make the beautiful drive over to Portland to take part in an annual Socially Responsible Investment event. This has always proved to be motivating and full of great information about the latest SRI trends and insight.

Here are a few facts and figures from the event highlighting SRI Growth . . .

• Over 8000 companies now include reporting on sustainable issues . . . up from only 300 companies in the 1980’s using these criteria in their reports.
• Mutual fund companies are increasingly filing Shareholder Resolutions to influence corporate management . . . Calvert Investments filed 56 resolutions with, 27 reaching resolutions without a vote.
• Certified Financial Analysts (CFA) surveyed showed that 76% are using ESG as measurements to manage risks . . . Stranded assets affecting valuations was one risk that was cited.

Once again, our company was the only Investment Advisor Representative from Bend and all of Central Oregon. This is a little confusing considering the incredible growth taking place in this arena,(not forgetting to mention the important issues being influenced by those embracing SRI). I was happy to reconnect with our friends from a local Bend private equity firm, Clean USA Power . They seem to be thriving on the incredible expansion of alternative energy projects in the West. They have a great video on their site which is worth checking out.

A trend that was highlighted at the conference is the evolving terminology used to describe what’s going on in SRI. I guess it’s human nature, but I bowed to peer pressure by using ESG or Impact rather than SRI in my discussions with others at the conference. Three years into this, and I’m already feeling outdated! If you’ve followed our blog at all then you are familiar with all three terms, especially SRI. Impact Investing represents a shift in focus from “screening out” positions or companies that are doing harm towards those that are actually making a positive difference in the SRI realm. Environmental, Social, and Governance (ESG) factors are criteria used to evaluate and rank companies based on these measurements.

ESG evaluation criteria has become more main-stream among investment managers which the previously regerenced increase in use by CFAs indicates. Two leading research companies represented at the event (MorningStar and MSCI), cited demand for such criteria as a motivating factor for recent updates to their software which now include ESG. This now allows advisers and individual investors to incorporate these SRI factors when deciding which companies and mutual funds to include in portfolios.

There was much discussion of how NOT using ESG criteria as part of the corporate policies is becoming a major risk factor, especially from a reputation standpoint for publicly traded companies. Since we have always assumed that doing business honestly and ethically assists in company success, this is a welcome change that could have lasting effects on successful portfolio selection and, more importantly, on the US economy as a whole. Now, if we could just get the word out to Central Oregon investors!

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