On Socially Responsible Investing (and Grandma)

Since posting that we were realigning our financial values, I’ve been doing a deep dive into socially responsible investing and I have to say…I am not at all impressed.

For years now, our main investment choice has been the ETF (Exchange Traded Fund). ETFs are similar to mutual funds but with fewer (if any) fees and no loads. Investing in ETFs is easy to learn and I am not going to lie, it has been pretty profitable. The majority of our ETFs are with Vanguard, which I recently found does indeed offer social responsible options. These options (sometimes called ESG funds or Environmental, Social, and Governance funds) exclude companies that:

  • Produce alcohol, tobacco, gambling, and adult entertainment.
  • Produce civilian, controversial, and conventional weapons.
  • Produce nuclear power.
  • Do not meet certain diversity criteria.
  • Have violations of labor rights, human rights, anti-corruption, and environmental standards defined by the UN.
  • Own proved or probable reserves in fossil fuels such as coal, oil, or gas.

On the surface this sounds great, and to most folks interested in simply making better investment choices, I suppose it might be. Excluding companies that support child labor, automatic weapons, and porn is a no-brainer, but personally, that’s not my only criteria for determining a good investment. Forget the exclusions, I want to know what these funds include. Do these companies align with my values?

When I drilled down into Vanguard’s top socially responsible ETFs, I found that the majority held these 10 companies:

  • Apple Inc.
  • Microsoft Corp.
  • Amazon.com Inc.
  • Alphabet Inc. (the parent company of Google)
  • Facebook Inc.
  • Tesla Inc.
  • JPMorgan Chase & Co.
  • Bank of America, Inc.
  • Coca-Cola Co.
  • Procter & Gamble Co.

Call me knit-picky, but when I think of socially responsible companies, I don’t exactly think of Amazon and Coca-Cola. Sure, you can make the argument that these companies are meeting certain sustainability standards (recyclable and compostable packaging, fuel efficient delivery vehicles, etc.) but for me, it goes deeper than just what you see on the surface. Words like childhood obesity, diabetes, the collapse of local economies, unfair labor practices — these are the things I think of when I think of Coke and Amazon, and I certainly don’t want to invest in that!

And what about the other companies on the list? Tesla has had its fair share of bad press lately and the big banks, JPMorgan Chase and Bank of America, despite recently making climate pledges, have long been among the biggest backers of fossil fuel production.

I can’t help but wonder, how does a company make the list of socially responsible investment choices??

On the upside though, we have begun the process of transitioning from a big bank to a local credit union for our regular checking and savings accounts. We chose a credit union because they have an extremely small ecological footprint, since they are operated locally by and for their members. I used the website Green America to find a green credit union in our area. The one we chose offers membership to people living within just a 6-county radius.

I don’t know why we didn’t do this sooner. My grandparents always banked with a credit union and never had an issue. They also never owned a stock and probably would have thought an ETF was a creature from outer space and wonder why on Earth I was spending so much time searching for one! I do remember going to credit union meetings with my grandma. Okay, I mostly remember the snacks and the door prizes 🙂

I never thought much about my grandparent’s finances when I was a kid. It wasn’t that they never spoke about money, or the value of working hard and saving. It was more that they had such a rich life outside of what money could buy that it wasn’t that big of a deal to them, or me. From gardening and canning to quilting and woodworking, their investments were in time, and I was so lucky to receive some those dividends. Which is a long way of saying, maybe my grandparents had the right idea. Maybe the best investments are made at home.

I’m going to put the credit union in the win column, but as far as investments go, maybe the most socially responsible one we can make is the one that has nothing to do with Wall Street.

So, where does this leave us? Honestly, I don’t know. As my mom might say, I need to pray over it a bit more.

10 thoughts on “On Socially Responsible Investing (and Grandma)

  1. Wow, had no idea that some of those companies would qualify as “socially responsible” according to Vanguard…Coca-Cola definitely doesn’t register as such in my book!

    Liked by 1 person

  2. My daughters and I bank at credit unions as well.
    And oh yes, I totally agree with you about my grandparents as well!! They didn’t go searching after stuff. They lived in their home over 60 years, never replaced the furniture, as far as I ever knew! lol
    I know how to quilt, and made jelly once. But DD1 Wants to grow our own food, and learn how to can, and preserve. Not sure if I’m quite up to that challenge, but I do want me grandbabies to know how, so that means I have to be the example.
    I admire how hard you work to find investments that are right for you. That’s something I have never even done anything about.
    I wish dollars grew in the dirt like your pic! lol

    Liked by 2 people

    1. Wouldn’t that be nice! We’d all become gardeners then! 🙂

      You know…come to think of it, my grandparents never replaced their furniture either. My grandma had the same gold floral couch and rust colored chair for her entire adult life. Wow! Not only does that say something for frugality but it speaks to how well things were made back then. We can’t keep a couch 5 years without it falling apart!

      Liked by 1 person

  3. This is a thought provoking post. I am very happy to bank with our credit union. I would also note that I do everything remotely, so I am not sure why any limit on a physical location is needed. I agree that investments made at home are the best, but the two types of investments (the other being financial) don’t need to be mutually exclusive, do they? Good luck with your mission, and I look forward to reading your future posts about it. Enjoy your day!

    Liked by 1 person

    1. Thanks, Betty! Yes, we do most things remotely too. I think the geographical limit for our credit union just means that the money will stay in our immediate community, helping our neighbors instead of supporting large corporations. At least I hope that’s what that means 🙂

      Liked by 1 person

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