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These Advisors Actually ‘Walk the Talk' When It Comes to Socially Responsible Investing

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  • Sustainability-minded businesses are applying to become certified as ESG-compliant through the non-profit B Lab. The process entails an intense assessment of a company's impact on various stakeholders; results are then posted publicly.
  • Besides their corporate structures and certifications, advisor firms often express their commitment to societal improvement through their community activities.

For some advisors, embracing environmental, social, and good governance principles means more than just investing sustainably; it also means expressing their values through their practices' corporate structures and activities.

For example, BSW Wealth Partners in Boulder, Colorado, recently converted to a public benefit corporation structure.

"It's baked within the articles of incorporation to serve the needs of all stakeholders, whether customers, the community, physical environment or employees, versus traditional corporations who have a duty to only maximize shareholder value," said David Wolf, the firm's CEO.

Rather than negatively affecting profits, this type of structure leads to more durable long-term success and makes a firm more profitable over time, he added.

Certification adds accountability

In addition — or alternatively — sustainability-minded businesses, whether incorporated or not, are applying to become so-called "Certified B Corporations" through the non-profit B Lab. The process entails an intense assessment of the company's impact on its various stakeholders; the results are then posted publicly. All the practices reviewed for this article have attained this designation.

The certification adds an extra layer of accountability, said Lydia Alexandra Dest, CEO and founder of Willow Investments in Pittsfield, Massachusetts.

"It helps us look beyond ourselves and takes our firm to a whole other level," she said. "It's about conservation of resources, treating employees a certain way, transparence in governance.

"It brings home our interconnectedness," Dest added. "It's the first step in honoring all life forms and holds you to a standard.

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"It's the only way our future can be sustained."

Todd Walker, founder of Greenvest in Wells, Vermont, said his firm wanted to demonstrate its dedication to sustainability principles such as social justice, local community and ecology.

"Because clients and other companies can see [our listing], it adds an element of trust and credibility," he said. "We wanted people to know what they were buying.

"It's too easy to be 'social-lite,'" Walker added. "It's a seal of approval."

Furthermore, Walker appreciates the fellowship among B-Corps in the way they co-promote each other's businesses and the certification's mission.

"It's often a final convincer for people to choose our firm," he said.

Wolf agreed, noting certification has enhanced his firm's business. "We've had prospective clients say they used the B Corp database to find us," he said. "Our belief is that B Corp certification will become the 'organic' of corporations."

'Walking the talk'

Besides their corporate structures and certifications, advisory firms express their commitment to societal improvement through their community activities. For example, Dest's firm purchases locally produced non-GMO ("genetically modified organism") staples for its employees, offers local nutrition classes and leadership workshops, and mentors local women's groups in self-empowerment.

For his part, Walker's firm, Greenvest, has signed on as a member of the UN Global Compact, to locally promote and support its global "Sustainable Development Goals," such as alleviating poverty and hunger and improving the environment. As examples, the firm donates to the area's food bank, community loan fund and organic farms. Greenvest also offers access to private equity to invest in recyclers and clean energy power companies that have a presence in Vermont.

"Our clients were always activists, deeply concerned with the planet," he said. "They want to see a firm is exactly the same way.

"When people buy from us, they're getting 'Vermont Pure.'

Some see their ESG-focused practices as vehicles to address local economic and racial inequalities.

"I see impact investing at its core as social work and cultural anthropology," said Angela Barbash, CEO and co-founder of Revalue in Ypsilanti, Michigan.

Situated just outside affluent Ann Arbor, Michigan, Barbash said many of her working-class clients are confronting stark economic and racial inequalities. As a result, upon founding her practice in 2013, she made a commitment to do the work to democratize access to financial services and community investment (generally only available to accredited investors).

To provide access to financial services for low- and middle-income clients, Revalue twice a year offers them group virtual financial education/financial planning classes; about 3,500 people have taken part over the past seven years. Participants are then invited to have their portfolios served by the practice, which has low fees and no required minimums.

In terms of bringing community investing opportunities to non-accredited investors, Barbash and her firm have included classes on community investing within the financial education curriculum, courted the necessary crowdfunding platforms to Michigan to serve her mass-market clients, and enabled these individuals to invest in local projects such as workforce housing and small Main Street businesses.

With a practice serving about 30% high-net-worth and 70% low- to middle-income clients, Barbash has a message for the investing public.

"If high-net-worth investors want to support low- and middle-income families' access to community investing and financial services, they have to choose advisors who are going beyond just ESG funds and are actually walking the talk," she said.

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