Another example of shareholder engagement is the increased pressure on investments in firearms in the wake of the shooting at Sandy Hook Elementary School, US SIF Foundation, a nonprofit SRI research organization, says. From 2012 to 2014, among institutional investors, policies restricting investments in weapons manufacturers grew to affect $355 billion in assets, a four-fold increase, the report says.
Socially responsible investing has been around for decades, but recently it has grown dramatically. It grew 76 percent between 2012 and 2014, constituting a $6.57 trillion sector at the beginning of this year, the trend report says.
“The growth trend is way above expectations,” says Peters. “Shareholders are demanding greater involvement. Financial advisors should realize there are ways to help people gain competitive returns, while aligning their investment portfolios with their values.”
Mark Regier, vice president of stewardship investing for Praxis Mutual Funds and Everence Financial, a faith-based financial services, banking and insurance company in Goshen, Ind., says advisors should be using shareholder engagement and the socially responsible funds they are associated with as a selling point for their businesses.
For example, Regier says, Everence and others successfully put pressure on Hershey to stop buying cocoa from companies in West Africa that use child labor. The company started with one line of chocolate and certified it child labor free and will certify 100 percent of their cocoa beans as being harvested without child labor by 2020.
“That is one example of very positive shareholder engagement,” he says. “An advisor who can draw clients in who care about issues is connecting with them on a more profound level.”