Socially Responsible Investing For Dummies

362 Pages·2008·3.52 MB·English

Spine: .72”
Business/Personal Finance/Investing
Making Everything Easier!™
Generate a good return as well
aesth gicoaold inwvilel swtmithe nthtsis guide to Open the book and find: So Socially Responsible
c
Want to make money while you make a difference in (cid:127) A clear introduction to social ia
the world? This practical, hands-on guide to smart social investing l
investing shows you how to maximize your profits while (cid:127) Issues to invest in, from ly I nve s t i ng
remaining true to your values. You get expert advice in R
environmental to international
e
targeting an issue you’re passionate about, researching
s
(cid:127) T he different types of investments
potential investments, and putting your socially responsible p
choices into action. (cid:127) How to buy and sell o
n
(cid:127) Get started with social investing basics — understand what it is, (cid:127) Fiduciary responsibilities for the s
why it works, and how investors define social responsibility social investor ib
l
(cid:127) Navigate the socially responsible enterprise — discover the (cid:127) How to use your investment e
business principles that help ethical organizations thrive clout to influence a company’s

I
performance n
(cid:127) Conduct your research — determine whether an investment has
v
financial potential and also serves your personal needs (cid:127) T en social investing traps you
e
must avoid
(cid:127) Evaluate your investment choices — from stocks and bonds to s
t
mutual funds and ETFs to real estate and high finance, select the (cid:127) Activist investing success stories i
n
best investments and adjust your portfolio over time
g
(cid:127) Get help from the pros — find brokers, financial planners, and
mutual fund companies that can help you with your decisions
Learn to:
(cid:127) Ensure your success — see how to diversify, monitor your
investments, join forces with others, vote your proxies, keep your Go to dummies.com
® (cid:127) Conduct effective research on potential
perspective, and more
for more! investments
(cid:127) Keep up with investment trends — discover how to take
advantage of new investment products and stay on top of (cid:127) Locate ethical companies and causes
industry changes
(cid:127) Align your current investments with
(cid:127) Recognize truly socially responsible investments — understand
your morals
how to tell socially responsible investment opportunities from
“feel good” opportunities
(cid:127) Appease both your conscience and
your wallet
$24.99 US / $26.99 CN / £15.99 UK
Ann C. Logue, MBA, has twelve years of working experience in financial
ISBN 978-0-470-39471-7
services and has taught business administration at the University of Illinois.
She is a finance writer who has written numerous articles on investment
Ann C. Logue, MBA
and has edited publications on equity trading and risk management.
Author, Hedge Funds For Dummies and
Logue Day Trading For Dummies
Socially Responsible
Investing
FOR
DUMmIES
‰
By Ann C. Logue
0011__339944771177--ffffiirrss..iinndddd ii 1111//2200//0088 1111::5555::0099 PPMM
Socially Responsible Investing For Dummies®
Published by
Wiley Publishing, Inc.
111 River St.
Hoboken, NJ 07030-5774
www.wiley.com
Copyright © 2009 by Wiley Publishing, Inc., Indianapolis, Indiana
Published by Wiley Publishing, Inc., Indianapolis, Indiana
Published simultaneously in Canada
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form
or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as
permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior
written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to
the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax [phone].
Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley
& Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://
www.wiley.com/go/permissions.
Trademarks: Wiley, the Wiley Publishing logo, For Dummies, the Dummies Man logo, A Reference for the
Rest of Us!, The Dummies Way, Dummies Daily, The Fun and Easy Way, Dummies.com, Making Everything
Easier, and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc. and/
or its affi liates in the United States and other countries, and may not be used without written permission.
All other trademarks are the property of their respective owners. Wiley Publishing, Inc., is not associated
with any product or vendor mentioned in this book.
LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: THE PUBLISHER AND THE AUTHOR MAKE NO
REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF
THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITH-
OUT LIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE
CREATED OR EXTENDED BY SALES OR PROMOTIONAL MATERIALS. THE ADVICE AND STRATEGIES
CONTAINED HEREIN MAY NOT BE SUITABLE FOR EVERY SITUATION. THIS WORK IS SOLD WITH THE
UNDERSTANDING THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING LEGAL, ACCOUNTING, OR
OTHER PROFESSIONAL SERVICES. IF PROFESSIONAL ASSISTANCE IS REQUIRED, THE SERVICES OF
A COMPETENT PROFESSIONAL PERSON SHOULD BE SOUGHT. NEITHER THE PUBLISHER NOR THE
AUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HEREFROM. THE FACT THAT AN ORGANIZA-
TION OR WEBSITE IS REFERRED TO IN THIS WORK AS A CITATION AND/OR A POTENTIAL SOURCE
OF FURTHER INFORMATION DOES NOT MEAN THAT THE AUTHOR OR THE PUBLISHER ENDORSES
THE INFORMATION THE ORGANIZATION OR WEBSITE MAY PROVIDE OR RECOMMENDATIONS IT
MAY MAKE. FURTHER, READERS SHOULD BE AWARE THAT INTERNET WEBSITES LISTED IN THIS
WORK MAY HAVE CHANGED OR DISAPPEARED BETWEEN WHEN THIS WORK WAS WRITTEN AND
WHEN IT IS READ.
For general information on our other products and services, please contact our Customer Care
Department within the U.S. at 800-762-2974, outside the U.S. at 317-572-3993, or fax [phone].
For technical support, please visit www.wiley.com/techsupport.
Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may
not be available in electronic books.
Library of Congress Control Number: 2008941622
ISBN: 978-0-470-39471-7
Manufactured in the United States of America
10 9 8 7 6 5 4 3 2 1
0011__339944771177--ffffiirrss..iinndddd iiii 1111//2200//0088 1111::5555::1100 PPMM
About the Author
Ann C. Logue is the author of Hedge Funds For Dummies (Wiley, 2006) and
Day Trading For Dummies (Wiley, 2007). She has written for Alpha, Barron’s,
MSN Money, Newsweek Japan, and Wealth Manager. She is a lecturer at the
Liautaud Graduate School of Business at the University of Illinois at Chicago.
Her current career follows 12 years of experience as an investment analyst.
She has a BA from Northwestern University and an MBA from the University
of Chicago, and she holds the Chartered Financial Analyst designation.
0011__339944771177--ffffiirrss..iinndddd iiiiii 1111//2200//0088 1111::5555::1100 PPMM
0011__339944771177--ffffiirrss..iinndddd iivv 1111//2200//0088 1111::5555::1100 PPMM
Dedication
Once again, to Rik and Andrew, for their love and support.
Acknowledgments
So many friends and strangers alike helped me with this book. Among them
were Nazim Ali of the Islamic Finance Project at Harvard University, Snehal
Bhagat, Cody Craynor at the Church of Jesus Christ of Latter-day Saints,
Jeffrey Dekro of Jewish Funds for Justice, Peyton Fleming at Ceres, Michael
Saleh Gassner, Nitesh Gor of Dharma Investments, Robert Gough of the
National Association of Socially Responsible Organizations, Aviya Kushner,
Rik Lantz, Eric Lee, David Loundy at Devon Bank, Bruce MacDonald of
Accion International, Ann McKenzie, Nell Minow of The Corporate Library,
Mark Orloswki at Sustainable Endowments, Brad Pokorny of the Baha’i
International Community, Nicole Rea, Lynne Meredith Schreiber, and Morgan
Simon of the Responsible Endowments Coalition. Their insights and ideas
made it much better.
As for the mechanics of putting together the book, Natalie Harris, Alissa
Schwipps, Vicki Adang, Patricia Hathaway, and Stacy Kennedy of Wiley were
great to work with. Finally, my agent, Marilyn Allen, made it all happen again.
Thanks, everyone!
0011__339944771177--ffffiirrss..iinndddd vv 1111//2200//0088 1111::5555::1100 PPMM
Publisher’s Acknowledgments
We’re proud of this book; please send us your comments through our Dummies online registration
form located at www.dummies.com/register/.
Some of the people who helped bring this book to market include the following:
Acquisitions, Editorial, and Media Composition Services
Development
Project Coordinator: Patrick Redmond
Project Editors: Natalie Faye Harris,
Layout and Graphics: Reuben W. Davis,
Alissa Schwipps
Sarah Philippart
Acquisitions Editor: Stacy Kennedy
Proofreaders: Amanda Graham,
Senior Copy Editor: Victoria M. Adang Bonnie Mikkelson
Assistant Editor: Erin Calligan Mooney Indexer: Potomac Indexing, LLC
General Reviewer: Patricia Hathaway
Editorial Manager: Christine Meloy Beck
Editorial Assistants: Jennette ElNaggar,
David Lutton, Joe Niesen
Cover Photos: © lmasses.com/corbis
Cartoons: Rich Tennant (www.the5thwave.com)
Publishing and Editorial for Consumer Dummies
Diane Graves Steele, Vice President and Publisher, Consumer Dummies
Kristin Ferguson-Wagstaffe, Product Development Director, Consumer Dummies
Ensley Eikenburg, Associate Publisher, Travel
Kelly Regan, Editorial Director, Travel
Publishing for Technology Dummies
Andy Cummings, Vice President and Publisher, Dummies Technology/General User
Composition Services
Gerry Fahey, Vice President of Production Services
Debbie Stailey, Director of Composition Services
0011__339944771177--ffffiirrss..iinndddd vvii 1111//2200//0088 1111::5555::1100 PPMM
Contents at a Glance
Introduction ................................................................ 1
Part I: Getting Started in Social Investing ..................... 7
Chapter 1: Investing the Socially Responsible Way ......................................................9
Chapter 2: The Socially Responsible Enterprise: Understanding and Monitoring
Performance ...................................................................................................................23
Chapter 3: Understanding Why Institutions Invest the Way They Do ......................41
Chapter 4: How to Research Responsible Investments ..............................................53
Chapter 5: Lights, Research, Action! Using Your Research to Infl uence Your
Investments ....................................................................................................................79
Part II: Issues to Invest In .......................................... 95
Chapter 6: Close to Home: Supporting Community Development ............................97
Chapter 7: Scrutinizing Governance: How Is the Company Run? ............................113
Chapter 8: Evaluating Environmental Investing .........................................................129
Chapter 9: The World around Us: Following International Affairs ..........................151
Chapter 10: Keeping Your Faith: Investing with Religious Beliefs ...........................167
Chapter 11: Social Change and the Responsible Corporation .................................179
Part III: Putting Your Socially Responsible
Choices into Action .................................................. 191
Chapter 12: Buying and Selling Responsible Stocks and Bonds ..............................193
Chapter 13: Mutual Funds and Exchange-Traded Funds (ETFs) .............................215
Chapter 14: Banking on Social Responsibility (and Insuring It, Too) .....................237
Chapter 15: The Responsible Side of Real Estate ......................................................253
Chapter 16: Getting into High Finance: Private Partnerships ..................................267
Chapter 17: Making a Difference with Microfi nance..................................................283
Part IV: The Part of Tens .......................................... 297
Chapter 18: Ten Tips for Social and Activist Investors.............................................299
Chapter 19: Ten Investment Traps and How to Avoid Them ...................................303
Chapter 20: Ten Socially Responsible Investing Success Stories ............................309
Appendix ................................................................. 315
Index ...................................................................... 321
0022__339944771177--ffttoocc..iinndddd vviiii 1111//2200//0088 1111::5555::2244 PPMM
0022__339944771177--ffttoocc..iinndddd vviiiiii 1111//2200//0088 1111::5555::2244 PPMM
Table of Contents
Introduction ................................................................. 1
About This Book ..............................................................................................2
Conventions Used in This Book .....................................................................2
What You’re Not to Read ................................................................................3
Foolish Assumptions .......................................................................................3
How This Book Is Organized ..........................................................................4
Part I: Getting Started in Social Investing ...........................................4
Part II: Issues to Invest In ......................................................................4
Part III: Putting Your Socially Responsible Choices into Action ......4
Part IV: The Part of Tens .......................................................................5
Icons Used in This Book .................................................................................5
Where to Go from Here ...................................................................................6
Part I: Getting Started in Social Investing ...................... 7
Chapter 1: Investing the Socially Responsible Way . . . . . . . . . . . . . . . .9
Social Investing DOES Give a Good Return ................................................10
Yes, Responsible Behavior Does Help Businesses ....................................11
Effects of charitable contributions ....................................................11
Identifying the 100 most sustainable companies .............................12
Weighing social performance against fi nancial performance ........12
The Moskowitz Prize for social investing research .........................13
Let’s Make a Deal: Exchanging Money for Everyone’s Benefi t .................14
Companies and governments need fi nancing ..................................14
Individuals and institutions need investments ................................15
Who Invests Responsibly, and Why? ..........................................................15
Contributing to the community .........................................................17
Monitoring a company’s managers ...................................................17
Hugging those trees .............................................................................18
Investing internationally and socially ...............................................19
Reminders from religion .....................................................................19
Choosing, Monitoring, and Infl uencing Your Investments .......................20
Ensuring socially responsible choices ..............................................20
Keeping abreast of changes ................................................................20
Making a careful selection of assets ..................................................21
Using shareholder activism ................................................................21
0022__339944771177--ffttoocc..iinndddd iixx 1111//2200//0088 1111::5555::2244 PPMM