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Responsible Investing
All people should match
their personalities, values and temperaments with their investment
selections. You should invest in what you believe in, and expect a market
rate of return from your investments. The argument has always been that if
you are a selective, socially responsible investor, and are limiting your
investment choices, then you should expect a lower rate of return than the
non-selective investor. This is just not the case. There are literally
thousands of companies to invest in, and one needs only 5 to 10 securities
to have a diversified stock portfolio. That said, the strategy is to avoid
stocks that cause harm to society and invest in companies that improve (or
are environmentally friendly to) society. “Green” stocks are environmentally
friendly companies. The industries and investment types that are considered
to have a negative impact on society are listed below:
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The “sin” stocks: tobacco,
alcohol and gambling companies
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Military and weapons
producers
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Companies that have
environmental issues
·
Companies with human resource
and human rights issues
·
Companies involved with
nuclear power
·
Companies involved in
abortion or pornography
·
Companies with unethical and
illegal business practices
Implementing a socially
responsible investing strategy is more involved then it appears and requires
research and discipline by the investor. For example:
·
Healthcare companies may
manufacture birth control devices.
·
Food companies may sell baby
formula that is ultimately deadly to babies in developing countries, but
is excellent for developed nations.
·
Manufacturing companies are
moving production to China and service companies are moving customer
service departments and computer personnel to India.
·
Drug companies are refusing
to sell their products to Canadian pharmacies that sell to U.S. customers.
·
Some restaurants profit from
the poor labor conditions of the workers who harvest tomatoes or other
produce.
Socially responsible and
green investing are good ways to influence companies with your investment
dollars. The capital markets are so large and diverse, that with the
assistance of a good investment advisor, this style should have no effect on
your investment returns.
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