DeVol Insurance & Financial Services
Spring 2019 

Socially Responsible Investing

I've been learning a lot about Calvert Research and Management recently and I thought I'd tell you about it. We have been investing in so called Socially Responsible funds for many years on behalf of our clients, who demand it. (Many thanks to those clients for encouraging us in this direction -- you know who you are.)

First, some definitions. Socially Responsible Investing (SRI) is an approach to investing that aims to incorporate environmental, social and governance (ESG) factors into investment decisions, to better manage risk and generate sustainable, long-term returns.

"Environmental" includes business factors such as energy management, the environmental impact of a company's products and supply chain, a company's climate change policies, and more.

"Social" looks at a company's product safety and ethics, supply chain human rights, consumer data security, employee diversity, employee health and safety, and more.

"Governance" considers board structure and gender diversity, business ethics, accounting policies and controls, and more.

Combing through the Concept

There have been some developments recently that have made Socially Responsible Investing a major part of our practice.

First, ESG has become increasingly popular and our clients' interests are reflecting this. Responsibly managed assets grew to $12 trillion by the start of 2018 according to the latest Report on US Sustainable, Responsible and Impact Investing Trends. That's a 38% increase since the last report at the start of 2016.
Source: US SIF: The Forum for Sustainable and Responsible Investment, 2018 Report on US Sustainable, Responsible and Impact Investing Trends. Data points are as of December 31 of the preceding year. If asset data were unavailable as of December 31, then publicly available data throughout the first quarter were used.

Second, Calvert, certainly one of the dominant players in the space, was recently purchased by an old Boston investment firm, Eaton Vance. Calvert moved its headquarters from Baltimore here to Boston and they have a very interesting story to tell.

Calvert's philosophy is described in the brochure, 
"Responsible Investing -- Positive Impact. Competitive Results," and is built on four pillars : performance, research, engagement and impact. Please click here to access the full brochure

Here are short descriptions of the four pillars:

A recent study of Fortune's 100 Best Companies to Work For found that the stocks of the ranking firms outperformed the broader market. For the 18-year period from 1998 to 2016, investing in companies on the list would have delivered a total return of more than triple that of the S&P 500 (713% vs. 229%). 
Sources: Fortune, "How Buying Stock in the 'Best Companies to Work For' Helped This Investor Crush the Market," Jen Wieczner, March 9, 2017; FTSE Russell, Russell Investments. From

Please see  page 4 of the pillars brochure for an illustration of high-ESG stock performance.

The percentage of companies in the S&P 500 that report on their sustainability efforts has grown from just 20% in 2011 to 85% in 2017, and Calvert is part of that trend. 
Source: Governance & Accountability Institute, Inc., "FLASH REPORT: 85% of the S&P 500 Companies Published Corporate Sustainability Reports in 2017," March 20, 2018

When Calvert buys shares in a particular company it gains influence over that company's behavior. It does this through proxy voting and corporate resolutions.

The president of Calvert recently provided a noteworthy example of this practice at a meeting I attended. The major grocery store chain, Kroger, had been selling assault rifles in its stores. After the Parkland shooting Calvert approached Kroger leadership and made a case from the shareholder's perspective -- not even that this is something Kroger should do for ethical reasons, but that it was not in the best interest of the company or its stock price if they continued this practice. In this way Calvert was instrumental in having these weapons removed from Kroger's shelves, along with related ammunition and assault rifle themed periodicals.

The companies Calvert invests in perform very well on ESG metrics. Please see page 7 of the pillars brochure.

Calvert believes in the free-enterprise system, as that system has dramatically improved living standards around the world. They just want to see it behave more responsibly.

Aside from Calvert ...

Other socially responsible firms are DominiParnassus Crossmark's Steward,  Boston Trust's Walden,  and Pax

Also, many mutual fund companies include socially responsible funds among their offerings.

Thomas Phelps DeVol is the founder of DeVol Insurance & Financial Services. He enjoys helping people transform their hopes about the future into attainable retirement plans. His persistence, know-how and diligence are the keys to his success -- and that of his clients.

Tom has three children and lives with his wife, Connie, and their son in Newton, Massachusetts. He enjoys gardening, tennis, jogging and opera.

Tom can be reached at 617-964-6404 or via  email .
Are you finding our newsletters useful? If so, can you think of any friends and family with whom you would like to share them? You can either just: 1) Reply to us with the new email address(es), once you have their permission, or 2) Click the Forward this email link below. 

Securities offered through Parkland Securities, LLC. Member FINRA/SIPC. Investment advisory services offered through Sigma Planning Corporation, a registered investment advisor. DeVol Insurance & Financial Services is independent of Parkland Securities, LLC and SPC.

PHOTO CREDITS: PollyDot from Pixabay; InspiredImages from Pixabay; LoggaWiggler from Pixabay;
View my profile on LinkedIn