For many years, investors were told they had to choose between earning strong returns and investing according to their values.
Today, that conversation has changed.
In this episode of Money Talks Life Lessons, Joanne and Melissa sit down with Landon Folz from NEI Investments to explore the world of socially responsible investing (SRI). Together, they discuss how investors can align their portfolios with their personal values while still pursuing long-term financial success.
The discussion challenges some of the biggest myths surrounding responsible investing and highlights how investors can use their money to encourage positive change without sacrificing diversification, performance, or growth.
Here are the key takeaways.
What Is Socially Responsible Investing?
At its core, socially responsible investing is investing with purpose.
For some investors, that means aligning investments with personal values.
For others, it means supporting companies that are focused on sustainability, ethical business practices, and long-term success.
Responsible investing often incorporates Environmental, Social, and Governance (ESG) factors when evaluating companies.
Examples include:
Environmental Factors
- Climate impact
- Energy efficiency
- Water usage
- Waste reduction
- Sustainable resource management
Social Factors
- Employee wellbeing
- Labour practices
- Human rights
- Community impact
- Customer safety
Governance Factors
- Executive compensation
- Board diversity
- Corporate transparency
- Business ethics
- Shareholder rights
Rather than focusing solely on financial performance, responsible investing considers the broader factors that may impact a company's long-term success.
Responsible Investing Has Come a Long Way
Years ago, socially responsible investing was often viewed as a niche strategy.
Investors worried about:
- Limited investment options
- Reduced diversification
- Lower returns
- Higher fees
Today, those concerns are becoming less common.
According to Landon, responsible investing has evolved significantly over the last decade.
Investors now have access to:
- Broad market exposure
- Diversified portfolios
- Multiple asset classes
- Professional management
- Institutional-quality investment solutions
What was once considered a specialized investment approach has become increasingly mainstream.
Making Money While Making a Difference
One of the most powerful themes throughout the conversation is the idea that investors can help create change through ownership.
As Landon explained:
You can't change a company that you don't own.
This philosophy is central to NEI's approach.
Rather than automatically excluding companies, responsible investors often engage with them to encourage positive change.
This may involve:
- Direct conversations with management
- Proxy voting
- Shareholder resolutions
- Industry-level advocacy
- Long-term engagement initiatives
The goal isn't perfection.
The goal is progress.
Real-World Change Through Shareholder Engagement
One fascinating example discussed during the episode involved Amazon's packaging practices.
Through shareholder engagement efforts, investors encouraged the company to reconsider its packaging materials.
Over time, Amazon transitioned away from certain packaging materials and increased its use of paper-based alternatives.
The result created benefits for:
- Consumers
- The environment
- Shipping efficiency
- Business operations
It's a practical example of how investors can influence corporate behaviour through active ownership.
Why More Investors Are Interested in ESG Investing
Socially responsible investing is attracting attention from investors of all ages.
Increasingly, people want to know:
- What companies they own
- How those companies operate
- Whether investments align with their values
- What impact their capital is creating
The interest goes far beyond younger investors.
According to Landon, responsible investing conversations are happening with:
- Retirees
- Business owners
- Families
- High-net-worth investors
- Foundations
- Pension funds
- Institutions
For many people, investment decisions are no longer based solely on returns.
Values matter too.
ESG Analysis Helps Identify Hidden Risks
One of the biggest misconceptions about responsible investing is that it focuses only on values.
In reality, ESG analysis can also be a powerful risk-management tool.
Traditional financial analysis looks at factors such as:
- Revenue
- Earnings
- Cash flow
- Balance sheets
ESG analysis examines risks that may not immediately appear in financial statements, including:
- Environmental liabilities
- Workplace issues
- Corporate governance concerns
- Regulatory challenges
- Reputation risks
These factors can have a significant impact on a company's future success.
For many institutional investors, ESG analysis has become an important part of evaluating long-term business quality.
Does Responsible Investing Mean Lower Returns?
Perhaps the most common question investors ask is:
"Will I earn less if I invest responsibly?"
According to Landon, the evidence suggests otherwise.
While every investment strategy is unique, research continues to show that incorporating ESG factors does not automatically mean sacrificing returns.
Instead, responsible investing focuses on identifying:
- Quality businesses
- Sustainable growth opportunities
- Long-term risks
- Strong management teams
The objective remains the same as any other investment strategy:
Generate attractive long-term returns while managing risk appropriately.
Does Responsible Investing Cost More?
Another common myth is that responsible investing comes with significantly higher fees.
According to the discussion, that isn't necessarily true.
As responsible investing has become more widely adopted:
- More investment options have become available
- Research has become more accessible
- Economies of scale have increased
- Costs have become increasingly competitive
Today, many responsible investment solutions have fee structures similar to traditional investments.
Investors no longer need to assume they'll pay a premium simply because they care about ESG factors.
Beyond Exclusions: A More Thoughtful Approach
When people think about responsible investing, many assume it's simply about avoiding certain industries.
While exclusions can be part of the process, modern responsible investing is much broader.
Approaches may include:
ESG Integration
Evaluating environmental, social, and governance factors alongside traditional financial analysis.
Shareholder Engagement
Working directly with companies to encourage improvements.
Impact Investing
Investing in companies or projects designed to create measurable positive outcomes.
Proxy Voting
Using shareholder voting rights to influence company decisions.
Positive Screening
Seeking companies that demonstrate leadership in sustainability and responsible business practices.
This broader approach allows investors to remain diversified while still promoting meaningful change.
Measuring Impact Matters
One challenge investors often face is understanding whether their investments are actually making a difference.
NEI addresses this by providing impact reporting that measures outcomes such as:
- Water conservation
- Renewable energy generation
- Waste reduction
- Healthcare access
- Financial inclusion
These reports help investors see how the companies they own are contributing to measurable results.
The focus is on transparency rather than simply making claims.
Understanding Greenwashing
As responsible investing becomes more popular, investors are increasingly concerned about greenwashing.
Greenwashing occurs when organizations promote themselves as environmentally or socially responsible without meaningful evidence.
That's why investors should always:
- Look beneath the surface
- Review fund holdings
- Understand investment processes
- Ask about engagement strategies
- Evaluate impact reporting
- Request transparency
Responsible investing should be supported by clear actions, not just marketing language.
The Importance of Asking Questions
For investors interested in socially responsible investing, Landon suggests asking their advisor:
- What responsible investing options are available?
- How are ESG factors incorporated?
- What companies are included in the portfolio?
- How does shareholder engagement work?
- Are there impact reports available?
- What role does responsible investing play in my overall plan?
The conversation starts with curiosity.
You don't need all the answers immediately.
You simply need to start asking questions.
The Future of Responsible Investing
Looking ahead, responsible investing appears poised for continued growth.
Several trends are supporting this momentum:
- Increased investor awareness
- Growing demand for transparency
- Greater corporate accountability
- Expanded reporting standards
- More shareholder engagement
- Generational wealth transfer
Many investors now expect their portfolios to reflect both their financial objectives and personal values.
For them, responsible investing is no longer an alternative strategy.
It's becoming a standard expectation.
Final Thoughts
The debate around socially responsible investing has evolved.
The question is no longer whether investors must sacrifice returns to invest according to their values.
Instead, the conversation has shifted to how investors can use their ownership to create positive change while pursuing long-term financial success.
As Landon reminds us, progress matters more than perfection.
Whether it's environmental initiatives, stronger governance practices, improved labour standards, or shareholder engagement, investors have more influence than they may realize.
And perhaps the most important takeaway from this episode is simple:
You can't change a company that you don't own.
Frequently Asked Questions
What is socially responsible investing?
Socially responsible investing incorporates environmental, social, and governance factors alongside traditional financial analysis when selecting investments.
Does responsible investing mean lower returns?
Not necessarily. Research and industry experience suggest investors can pursue competitive long-term returns while incorporating ESG factors into their portfolios.
Does socially responsible investing cost more?
In many cases, no. As responsible investing has become more mainstream, fees have become increasingly competitive with traditional investment options.
What is shareholder engagement?
Shareholder engagement involves investors working with companies to encourage positive changes in areas such as environmental practices, governance, transparency, and social responsibility.
How can I learn whether socially responsible investing is right for me?
Start by talking with your financial advisor about your goals, values, and the responsible investing options available within your overall financial plan.