The sustainable and responsible investing movement has gained steam in the past 20 years, to the tune of about $3.07 trillion in total assets under management according to a 2010 report from the Forum for Sustainable and Responsible Investment, or US SIF.
There are many options available for investors interested in environmental, social and governance issues, or ESG. There are mutual funds that look for leaders in various industries; companies that manage their environmental impact responsibly or that follow progressive governance practices, for instance putting women or people of diverse ethnic background on the board of directors as a matter of habit.
On the fixed-income side, there are bond funds that screen for those same issues of environmental sustainability, social responsibility and sound governance.
And there are banks that work to improve local communities known as community development financial institutions, or CDFIs. According to the CDFI Coalition website, there are more than 1,000 CDFIs across the country providing loans and financial services to people and businesses that might not otherwise be served by mainstream banks.
There are even a few financial institutions that offer CDs with the purpose of putting the money to good use in environmentally sustainable businesses specifically.
For instance, in May, New Resource Bank in San Francisco announced the launch of a new CD that lets savers direct their funds to one of three sustainability-related sectors: solar and alternative energy, organic products or nonprofit organizations.
From the press release:
"The Impact CD gives our customers more choices, allowing them to direct their deposits to the area they are most passionate about," said New Resource President and CEO Vince Siciliano. "The Impact CD also better reflects the depth and breadth of our lending to sustainability-oriented businesses and organizations."
The Impact CD is available for terms ranging from one month to five years, with a $2,500 minimum opening balance. Clients choose their personal Impact segment when they open the CD. Their funds will then support new loans by New Resource Bank to solar and other alternative energy businesses and projects, businesses in the organic product sector or nonprofit organizations.
I personally like the idea of depositing money in community development banks, knowing that the money will be used for local loans or improving local businesses in under-served areas. Even more, the idea that CDs would fund projects that are focused on environmental sustainability sounds really exciting.
What do you think?
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