I recently spoke with Cliff Feigenbaum, founder and publisher of the Santa Fe-based GreenMoney Journal, a newsletter on socially-responsible investing. That catch-all term generally refers to investing in companies that are environmentally-friendly or abide by other values. Tobacco, alcohol, military, and gambling companies are generally excluded. Feigenbaum explained the definition of socially-responsible investing, which he says means different things to different people, and whether it comes with a price. Excerpts:
Why did you found the GreenMoney Journal?
In the early 1990s, I was working at a hospital in the Northwest, and I discovered that the mutual funds in the 401(k) plan were full of tobacco stock. I thought, "This seems really inappropriate for a health care institution. That's how it started. I wanted to make informed financial decisions and I wasn't finding the information to do that. So I started gathering information, and a year later, I started putting out a six-page newsletter. The goal was to influence the way people shop and invest.
How do you define socially-responsible investing? It seems like it would mean something different to everyone.
It does. One question I have for people is, "What do you want to profit from? What don't you want to profit from?" I have 70-year-old friends who don't consider themselves socially responsible investors at all except they would never take money from a tobacco company. They do screen investments but they don't think of themselves as socially-responsible investors.
Do you avoid large index funds such as those that mimic the S&P 500, since that would mean investing in tobacco companies, for example?
Yes. I invest in the Domini 400 Social Index, which has 250 of the 500 companies in the S&P 500. So all 250 of those have passed some screening process. Over the ten years that it existed, the Domini 400 outperformed the S&P 500.
In general, do people need to make a financial sacrifice to invest in socially-responsible funds?
No, not over the long-term. People have to ask themselves, "Are you comfortable profiteering from war? Is that the kind of profit you want?" Sometimes you can't beat $140 a barrel oil. The profits will be there until the green industry matures. I firmly believe in the future of organics. How many more food scares do we need?
Can have more of an impact in other ways, such as by changing your shopping habits.
You do both. A lot of people say, "I don't want to be in the stock market, what can I do?" I say, "Shop. Shop with your values." People should look at the annual report, the list of companies, and then go shop at those stores. It will help their own investments. It balances out with shopping locally. I split my money between Whole Foods and local farmers' markets.