Some wealthy investors say they are reluctant to make investments on companies that proclaim they have a socially responsible strategy because they wonder whether those are just words made to benefit the company from a public relations standpoint.
A Spectrem Group study of Millionaire investors with a net worth of between $1 million and $5 million not including primary residence showed that 31 percent of investors consider the social responsibility of investments. However, among investors who do not consider social responsibility in their investments, 49 percent said they feel most companies claiming social responsibility in their corporate behavior do so simply for public relations purposes.
Among Ultra High Net Worth investors with a net worth between $5 million and $25 million not including primary residence, 19 percent of UHNW investors consider the social responsibility of their investments. However, among investors who have do not consider social responsibility in their investments. 46 percent said they feel most companies claiming social responsibility in their corporate behavior do so simply for public relations purposes.
However, 35 percent of UHNW investors aged 46 years and younger look at the social responsibility of their investments and 41 percent of Millionaire investors under the age of 45 do the same.
There is a way to know for sure whether you are dealing with a socially responsible company or investment fund.
There is a certification program called B Corp which issues approval only for companies that meet comprehensive and transparent social and environmental performance standards. These companies also have to meet legal accountability standards.
The B Corporation is a nonprofit organization created in 2007 and funded by the likes of the Rockefeller Foundation, Deloitte LLP, the Prudential Foundation, and the United States Agency for International Development. The organizers compare Certified B status to an LEED certification for green buildings and USDA certification for agricultural products.
There are investment angles to being certified as a socially responsible corporation.
There are presently 800 companies from 27 countries across 60 industries that have are Certified B corporations as determined by the organization’s B Lab. Ben & Jerry’s has B Corp certification, as does Patagonia, the New Belgium Brewing Co., and Seventh Generation.
Investment companies that have received B Corp certification include Green Retirement Plans, Inc., Clean Yield Asset Management, and Breckinridge Capital Advisors, among several others.
Certification is not easy, making the certification more significant. Companies are required to take a survey of their socially responsible practices, and certification can cost between $500 and $25,000 depending on the size of the company.