Dr. Rauterkaus presents information about Ethical Investing in the latest installment of Emmet O'Neal Library's Smart Directions series, sponsored by ALA and FINRA.

2. Disclaimer
• Andreas Rauterkus is not a registered
investment advisor or broker/dealer. Readers
are advised that the material contained herein
should be used solely for informational
purposes. Andreas Rauterkus does not purport
to tell or suggest which investment securities
attendants should buy or sell for themselves.
You should always conduct your own research
and due diligence and obtain professional
advice before making any investment decision.

3. Objectives
• What is ethical investing?
– Socially Responsible Investing
– Environmental, Social and Governance (ESG) Investing
• Three legs of ethical investing
• Performance

4. What is Ethical Investing
• Socially Responsible Investment (SRI) is the
integration of personal values with monetary
investment

5. Three Legs of SRI
• Positive (affirmative) & Negative (avoidance) Social
Screening
• Shareholder Engagement / Proxy Activism
• Community Development Investing / Lending /
Micro-Lending

6. Implementation
• Avoidance: choose not to be affiliated with firms
engaging in business activities that conflict with
values
• Positive Investment: seek out firms engaged in
business practices consistent with social concerns
• Shareholder Advocacy: influence business activities
or policies

7. Trends

8. SRI Trends

9. Environmental, Social, and Governance (ESG)
Criteria
• Environmental criteria looks at how a company
performs as a steward of the natural environment.
– energy use, waste, pollution, natural resource conservation
and animal treatment
• Social criteria examines how a company manages
relationships with its employees, suppliers,
customers and the communities where it operates
• Governance deals with a company’s leadership,
executive pay, audits and internal controls,
and shareholder rights

10. ESG Issues Incorporated in Asset Management
• Environmental investment factors are incorporated in the
management of 672 investment vehicles with $2.94 trillion
in assets under management
• Social criteria, which include Sudan-avoidance policies and
community-related investment policies, incorporated in the
management of $4.27 trillion across a wide range of 770
investment vehicles
• Governance issues are incorporated by a total of 501
investment vehicles with $3.53 trillion in assets
• Product-specific criteria, such as restrictions on investment
in tobacco and alcohol, are included in the management of
445 investment vehicles with $1.76 trillion in assets.

11. FYI

12. Performance of SRI Funds

13. Alternatives?
• Invest conventionally
– Afterwards give your outperformance to charities that make
a difference.
–
• Problem : Some problems cannot be cleaned up,
such as malformed babies or drowning and starving
polar bears.
• Problem : Most cleanups cost more than doing it
right in the first place. How much outperformance
will it take to clean up mess?

14. Major Players