A CONSCIOUS
APPROACH TO BUILDING
TRUE WEALTH
by Stuart T. Valentine
Founder of Centerpoint
Centerpoint Investment Strategies
| www.centerpointinvesting.com | (800) 509-9096
FOUR PART
ARTICLE
SERIES
Building True Wealth
Part I - From Idea to Action:
Socially Responsible Investing and the Growing Green Economy
I believe that investors are coming to the understanding that an investment in the
marketplace is a creative act, a vote for the kind of world you want to live in.
If you are like most Americans chances are you have heard of Socially Responsible
Investing (SRI). Further, it is probable that you have not yet fully committed your
investment dollars to the SRI concept. Hopefully this article will help you gain clarity and
a commitment to action towards what is at once a broad social movement and at the
same time an intensely personal process.
Growth of SRI
Just what is at the heart of the enthusiasm surrounding SRI? I believe it is that investors
are coming to understand that an investment in the marketplace is a creative act, a vote for the
kind of world you want to live in. Currently 53% of American households have some form of
stock ownership. The implication of this ownership is encouraging.
Stockholders -- driven by the principles of SRI – are more empowered to
realize the ideal of participatory capitalism at the level of the common
stockholder. Today, the three primary tools deployed by the SRI industry
are: portfolio screening, shareholder activism and community/impact
investments. Judging by the numbers the SRI movement is catching on. At the end of 1997
roughly $1 trillion was invested under the banner of SRI. Today that number has topped $3.07
trillion1.
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
Portfolio Screening
The practice of portfolio screening utilizes both negative or avoidance screening and
proactive, positive screening when selecting specific companies for investment. Avoidance
screening has been the dominant practice whereby the manager avoids companies whose
policies are not consistent with the investor’s values or ethical standards. Nuclear power,
weapons manufacturing, and animal testing are a few examples of avoidance screening used by
SRI investors2. Perhaps, the most powerful historical
display of how avoidance screening can effect real
social change was its contribution in ending
Apartheid in South Africa. Through the practice of
divesting from international corporations doing
business in South Africa investors financially
penalized the stock prices of these companies and
thereby contributed to weakening the political and economic case for Apartheid. This example
put corporate directors on notice that the financial and brand consequences of unethical or
amoral business practices can be very high.
Positive screening on the other hand involves the proactive inclusion of sectors or
company products and practices that fulfill the investor’s values and ethical standards while
remaining consistent with their investment objectives.
Shareholder Activism
Shareholder activism takes the SRI investor into a more proactive stance. With $3.07
trillion of muscle, SRI coalitions are able to spotlight issues and sponsor shareholder resolutions
for reform. An example was a resolution sponsored in 1997 by Progressive Asset Management,
a nationwide network of SRI investment consultants, to inspire the Disney Corporation to
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
change its practice of using sweat shop labor. Coalition building around
this issue resulted in 11% of the proxy vote going in favor of the
resolution and the company adopting a code of conduct for contract
suppliers. The growing use of shareholder activism holds tremendous
potential in supporting public corporations in the creation of more
lifesupporting and sustainable business practices.
Community Investing
Community investing builds on the principle that change begins with me in my own back
yard. Over the last several decades, SRI funding into entities such as Community Development
Financial Institutions (CDFIs) as well as the work of community development networks such as
the Business Alliance for Local Living Economies3 (BALLE) has contributed to the large growth of
community investment channels within the SRI industry. This rewiring of the investment
landscape represents a constructive rebalancing in the flow of investment capital from Wall
Street to Main Street. The April 2012 passage of the Equity Crowdfunding bill, as part of the
2012 JOBS Act, is the most recent example of the positive evolution in this community
investment trend. Given that the majority of Americans work for non-public business within
their communities an increase of community investment is likely to lead to greater community
vitality and economic resiliency4.
SRI and the Big Picture
The real work begins when you move from the idea of SRI into action. Is avoidance social
screening enough, or are shareholder activism and community investing attractive options to
you? Building a well-rounded investment portfolio involves balancing the tradeoffs between
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
performance, risk and ideals. Ultimately this is a very personal equation crafted of careful
thought and selection.
In the quest to build a more environmentally sound and socially just world it’s critical
that we as investors make the connection that our investment dollars have creative impact and
are a vote for the kind of world you want to live in. Choose wisely.
Footnotes
1. US SIF - http://ussif.org/resources/sriguide/srifacts.cfm
2. UN Principles of Responsible Investing - http://www.unpri.org/principles/
3. Business Alliance for Local Living Economies - http://www.livingeconomies.org/
4. Shulman, Michael, “Local Dollars, Local Sense: How to Shift Your Money from Wall
Street to Main Street and Achieve Real Prosperity”
5. Eisenstein, Charles, “Sacred Economics: Money, Gift, and Society in the Age of
Transition”
Part II - Values Based Investing: Enriching the Soul of American Culture
"The times they are a changing..." perhaps Bob Dylan's greatest line of the '60's Cultural
Revolution. Paradoxically, change is the one constant in the relative field of life and it is the
one that we humans tend to most resist. As investors, however, it is in understanding and
embracing the forces driving change in the economy that is the most essential for success in
the marketplace. While Internet technology is the current hot investment trend driving
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
change in the way we transact business, much as railroads were at the turn of the century or
radio was in the 1920's, it is the underlying cultural values that give the trend conscience and
soul. As such, understanding the demographics of existing and emerging cultural values are at
least as important in guiding your investment strategy as is the new hot stock pick.
Core Values: The Trunk of Our Culture
Social scientist Paul Ray and Psychologist Sherry Anderson’s landmark
text, “Cultural Creatives: How 50 Million People Are Changing the World”,
identified three segments in U.S. cultural values which also correlate with
somewhat different but parallel profiles around the world. These three major
values categories are Traditionalists, Modernists and Cultural Creatives.
The Traditionalists embody the foundational traditional values of family, church and the
small town American way. They tend to be uncomfortable with the narrative of modern society
and often find themselves looking back on some imagined past where things were the way they
“ought to be”. Traditionalists account for approximately 26% of the population, some 81 million
Americans with a median age of 53.
The Modernists have roots in the origin of the urban merchant class of 150 years ago.
They are the dominant group representing approximately 41% of the population, 129 million
strong with a median age of 39 years. Modernists place a high value on personal success. They
believe in consumerism, materialism and technological rationality in a model of continuous
economic growth. Interestingly they also carry the highest cynicism quotient among all groups.
Traditionalists and Modernists historically are the dominant way this country has known
itself. The values expressed by these two groups are what have dominantly determined
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
consumer habits, political behavior and investment practices throughout the American
experiment.
Emerging Values: A Key to Investment Success
Out of the cultural fire of the '60's has come a third coherent
worldview embodied in a group Ray and Anderson refer to as Cultural
Creatives. The backbone of the new economy, this group represents
approximately 33% of the population and includes 100 million Americans
with a median age of 42. They tend to be more altruistic and idealistic. Cultural Creatives have
strong psychological and spiritual interests, and a concern that their inner life be linked to social
activism. They place a high value on environmental concerns springing from a belief that nature
is sacred. They place a high value on relationships and not surprisingly a majority of them are
women.
What has taken Wall Street by surprise is the desire by Cultural Creatives to invest their
money consistent with their values. While the Traditionalists were some of the first pioneers in
exercising avoidance screening for the so called “Sin Stocks”, Modernists by and large have not
asked for this from their money management service providers. What is encouraging about the
emerging Socially Responsible Investing (SRI) movement is the degree of independence it has
because of its grass roots origin. SRI was not the brain child of a Merrill Lynch or Goldman
Sachs, it was a vision created by individuals like you who had the courage of their convictions; a
collective Cultural Creative idea driven by the ideals of an environmentally responsible, just and
free society. The key in realizing the impact of this idea is the recognition that our investment
dollars have creative power in shaping a more just and environmentally responsible society.
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
Lest you feel alone in your version of the Cultural Creative experience, already the SRI
movement has expanded the idea of values based investing to include portfolio social
screening, shareholder activism and community investing, practices that just 30 years ago were
barely practiced. Today, the US Forum for Sustainable and Responsible Investment estimates
that 12% of the US investment marketplace, or $3.07 trillion1, is at work under the SRI banner.
As the information economy gallops forward it is likely that this investment trend will
continue to grow in its effectiveness - one person at a time. Let us hope you are the next to
join.
Footnotes
1. US SIF- http://ussif.org/resources/sriguide/srifacts.cfm
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
Part III - Seeking the Triple Bottom Line:
Socially Responsible Investing and the New Economy
The new economic model accounts for the natural capital provided by ecological systems and
their contribution to maintaining life on earth.
Consumers and investors are coming to realize that an investment in the marketplace is a
creative act, an empowering vote for the kind of world you want to live in.
Evolution of Business and the Economy
When the first Pilgrims made it to the shores of the new world the first impression
voiced by the sailors was delight over the unlimited amount of straight virgin timber for use as
masts in the sailing vessels of the time. Britain had all but exhausted its
forest reserves for mast timber and America promised a seemingly
unlimited supply ready for the taking. The economy in the land of plenty
rewarded those who were best able to extract the vast wealth of natural
resources. The consequences for poor stewardship were relatively minor as
there was always more to draw from if you fouled your own nest or used up
the existing supply. The values held by these early pioneers eventually evolved their way
through the political economy, creating an economic model of ever expanding consumption
based on the exploitation of unlimited natural resources.
Now fast forward to the year 2012, we are presented with a number of sobering facts:
Financial turmoil in the global markets, excessive sovereign government debt, ecological
degradation and pervasive unemployment are the nagging consequences of this economic
model based on limitless growth and the single-minded pursuit of maximizing profit. According
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
to Lester Brown's recent book, “World on the Edge: How to Prevent Environmental and
Economic Collapse” every ecological system that supports industry and the global economy is in
decline. While there can be no doubt that the developed world's standard of living has soared
during this period, what is also clear is that these gains have been made at great cost to the
environment and resulted in an extreme global economic disparity. Further, it’s unlikely that
the underlying ecological systems fueling that growth can be sustained for yet another round as
developing countries move to improve their own standards of living. ‘Business as usual’ for both
developing and developed nations is simply not sustainable and a new model for business and
the economy is an imperative. Investors in companies that assume the status quo and ignore
this changing economic landscape do so at their own peril.
Business and Commerce: A New Model for a New Economy
Humans, being a highly adaptive lot, are addressing these consequences by evolving
new values systems. These in turn are creating the foundation of new economic models that
more efficiently manage human and natural resources.
The emerging new model for business and commerce has come to be known as
investing for the Triple Bottom Line. The three bottom lines are: People (social equity), Profit
(rate of return) and Planet (environment). The traditional model exploited the environment
considering it a wholly owned subsidiary of business, extracting natural resources with little
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
regard for sustainability, efficiency or social equity. Success under the old model is narrowly
defined in terms of rate of return on monetary capital. The new economic model still places
high importance on Profit while also optimizing for restoration of the natural capital provided
by planetary ecological systems and the impact the business has on social wellbeing. This Triple
Bottom Line approach is rooted in the reality that business is dependent upon and nested
within ecological and social systems. The companies that embrace this directive of the new
economy see the inevitability of adapting to this hierarchy. They are building manufacturing
models along with business and human resource practices that seek to harmonize with, and
restore natural systems.
Implementing the Triple Bottom Line
Many examples of companies pursuing the Triple Bottom Line model exist. One such
example, based in Atlanta, is the world's largest commercial carpet manufacturer. The CEO
reinvented the company’s business model from selling carpet to leasing floor covering services.
They also reengineered their product line using a new material that is more attractive, requires
97% less raw material input, is cheaper to produce, and is completely recyclable. Investors
seeking to capitalize on this sustainability trend should pay attention to companies like this,
particularly to management teams who understand the huge potential for taking advantage of
the inefficiencies within their industry and who are
redefining business objectives and building value
across the Triple Bottom Line. (For more examples
of companies that leaders in this bottom line model
see the references at the end of this article.
Time will tell which companies survive and
which fail in this transition into the new economy.
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
One constant can be counted on and that is change, the pace of which is likely to pick up in
direct proportion to the crisis levels experienced at the ecological level. Within every crisis,
however, is the seed of opportunity. As always, it will be the creative innovators who most
readily capitalize on the needs of the time that will survive.
References
•
Embedded Sustainability: The Next Big Competitive Advantage, by Chris Lazlo & Nadya
Zhexembayeva
•
Green to Gold: How smart companies use environmental strategy to innovate, create
value and build competitive advantage, by Daniel C. Esty and Andrew Winston
•
Natural Capitalism: Creating the next industrial revolution by Amory Lovins, L. Hunter
Lovins and Paul Hawken. Little Brown Copyright 1999
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
Part IV - Socially Responsible Investing: A Hero’s Journey
"We all carry a quality of inner greatness and the capacity to engage the hero within."
In Joseph Campbell's landmark work, "The Power
of Myth", Campbell identifies a theme common to
humanity throughout history which he refers to as "The
Hero's Journey." The usual hero's journey begins when
someone feels there is something lacking in the normal
experiences available to the members of the community.
This person then embarks on a series of adventures
beyond the ordinary, either to attain some expanded lifeinvigorating idea or to recover an essential aspect of
inner experience that has been lost to the community. In facing his or her fears and limitations,
the hero discovers a pathway towards greater personal understanding, which in turn leads to
the betterment of the whole community.
This linking of the individual inner transformation with the progress of the community is
what makes it a hero's journey. The Hero archetype, far from being an historical myth, is an
ever-present dynamic between individual and society. The desire to realize our own hero's
journey is always beckoning. From the courageous act of giving birth, to the dedicated pursuit
of world peace, even to the creative action we take via an investment in the marketplace, we all
carry a quality of inner greatness and the capacity to engage the hero within us.
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
The SRI Roadmap: Integrity + Purpose = Money Maturity
As we ride into the 21st century on a tidal wave of economic uncertainty traditional
ways of organizing society are breaking down and the subsequent search for meaning is
expanding. The growth of Socially Responsible Investing (SRI) is in part a reaction against an
aggressively promoted materialistic consumer economy. Sophisticated media campaigns tell us
that the emptiness we all feel to some degree inside can be filled if we only had more money
and stuff. Images and messages bombard us, selling the mirage of easy money via statesponsored lotteries, online trading accounts and mailboxes stuffed with pre-approved lines of
credit. For the unwary consumer these act as the sirens on the shore luring us with the promise
of happiness and fulfillment. This has spawned a consumption culture that has yet to come to
terms with the societal and environmental consequences of this lifestyle. SRI is an exploration
of how to redefine our relationship to money to support a more holistic and sustainable future.
What really motivates us in relationship to money? Is
our motivation of our own conscious creation or is it borrowed
and/or learned from childhood conditioning? What does it
take to extract ourselves from the quicksand of naïve belief
systems, onto a firm foundation of action consistent with our
core values? This is where we begin our own hero's journey.
But the way is not always clear. In another well-known hero's journey, Dante's Inferno, Dante's
pilgrimage to know God is NOT a path straight up the mountain but down through the inferno
of the ego. It is only by purging himself of the habits of suffering spawned in childhood
innocence that he is emotionally and psychologically free to be guided to mature adulthood.
The emergence of the SRI industry is in part an outward expression by investors to look
deeply within and face their own "inferno." By beginning the investment planning process with
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
an inner look at who we are and how we got this way, we are then free to build an investment
strategy that is more aligned with our true heart's desire. This moves us into action with a
higher degree of personal integrity in relationship to our investments. To be sure we must still
gain market and product knowledge and apply sound SRI investment practices like social
screening, shareholder advocacy and direct community and impact investment. The resources
listed at the end of this article can help you in this stage of the journey.
Empowered with a greater sense of integrity, SRI investors are putting their money
where their hearts are. Judging from the growth of new money being invested under the SRI
banner (estimated $3.07 Trillion as of year-end 20111) the hero's journey is producing results
across the triple bottom line: socially, environmentally and economically.
SRI is not only about taking actions in the marketplace via shareholder activism, social
screening or community investing. It also requires doing the inner work necessary for greater
personal understanding of who you really are and what you are committed to creating in the
world with your investment dollars. Your hero's reward will be greater clarity of purpose,
degree of integrity and maturity in relationship to your money.
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2010 | www.centerpointinvesting.com | (800) 509-9096
Building True Wealth
Resources
•
The Seven Stages of Money Maturity: Understanding the Spirit and Value of Money in
Your Life, by George Kinder. Delacourt Press, 1999
•
US SIF: The Forum for Sustainable and Responsible Investing
•
American Association of Individual Investors
Footnotes
1. US SIF - http://ussif.org/resources/sriguide/srifacts.cfm
DISCLOSURE:
Nothing in this article series is to be construed as a recommendation to buy or sell any
security or class of securities. Such a recommendation can only be made after personal
consultation. Past performance is not necessarily an indicator of future results.
Representative of and Securities offered through Financial West Group (FWG), Member
FINRA/SIPC.
The Progressive Asset Management Group is the socially responsible division of FWG.
Centerpoint Investment Strategies and FWG are unaffiliated entities.
OSJ: 55 Main St, Suite 415, Newmarket, NH 03857 (603) 659-7626.
This is not an offer to buy or sell securities. Such an offer can only be made by prospectus.
Please check all information before making an investment.
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2010 | www.centerpointinvesting.com | (800) 509-9096