Dominic Lombardo's  Instablog

Just started reading Investing For Change - actually, just finished reading it too.  I was drawn to this book for a few reasons:

• The book is a quick read, but the authors have a substantial body of knowledge to pull from.
• Authors have "hands on" experience in the investment management business, and they aren't just theorists
• Back of the book has an Appendix and, several pages of biographies for its footnotes.

Best For:

• Individual investors (uses little math)
• Investment professionals (though limited in scope)

 What I liked:

• I liked the historical background of SRI and the way the authors tied this with global investing trends (this info is difficult to synthesize from the gobs of texts on the Internet).

What I didn't like:

• The last chapter was, to put it simply, confusing, complex and poorly written.

Biggest Surprises:

• Hadn't realized how pivotal SRI was towards ending apartheid in South Africa.
• Increased Self-Awareness: hadn't realized how aligning ones values w/ investments would make oneself more authentic (as in Existentialist Philosophy).
  • Authenticity is the degree to which one is true to one's own personality, or character, despite outside influences.

Our Notes:

The authors use sharp analogies to grapple around an investing concept that could be confusing not only for novice investors but experts alike.  Today, professional pension fund managers are battling their consciences to determine whether SRI is even legal under ERISA (Employee Retirement Income Security Act of 1974) and the infamous Prudent Man Rule.

While superficially simplistic, the authors' intellectual curiosity shine with their pragmatic questioning of Socially Responsible Investing.

They ask, for example, "Is it really possible to express our moral values through our investments?" 

• "Does SRI imply taking more financial risks"
• "Does SRI force less virtuous companies to improve their behavior?"

One of my favorite analogies utilized was describing how the motives for various responsible investors are different.  The authors compare the different motives for vegetarians with that of SRI.  For example, some vegetarians are motivated by health reasons, others do not want to be accomplices in the killing of animals.

Similarly, some investors avoid "sin stocks", others seek investments in responsible companies, so long as they don't limit financial returns that much.  And still others, are using SRI as a quantitative metric to boost returns.  The latter has no morality involved.  The authors then go on to answer the questions mentioned above.

Conclusion:

This "quick-read" has an interesting take on SRI.  Though, may leave some readers asking for more as the authors breezed over certain points.