Socially Responsible Investing

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OurLifeInc.
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Post by OurLifeInc. »

In reading Affluenza (great book by the way!) it dawned on me that perhaps I am part of the problem, when I desire to be part of the solution. The problem being consumerism and the destruction of our planet, and my part of it being investing in companies that are not socially responsible. So I ask, does anyone have a social responsibility component to their investments and if yes, how do you apply it?


dpmorel
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Post by dpmorel »

I got a good answer on a similar post - viewtopic.php?t=256
Haven't done it yet, but I will...


George the original one
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Post by George the original one »

Apart from avoiding tobacco companies and companies with a poor safety record, I do not.


Q
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Post by Q »

I use Winslow Green Growth Fund myself, but, they haven't done too well since the recession. I would imagine with all the Green Tech investments going on, that it could rise up.


Emanuel
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Post by Emanuel »

Mohnish Pabrai follows that strategy, he mainly invests in companies with social responsibility. He told that in one of his interviews..


jacob
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Post by jacob »


Matthew
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Post by Matthew »

I love this idea. I need to look into it more. However, I believe most profit comes from corporations not being socially responsible.
The more overpriced something is, the better the bottom line. I am sure the stimulus will help some green/environmentally friendly ideas become profitable, but the idea of charging much above what something costs to produce is in a way socially irresponsible as you might ask yourself "when is profit just stealing from the have nots?". The whole idea of a business is to charge more than something costed to acquire it to turn a profit.
My experience with corporate PR and HR is that it is purely facade to make the employees and share holders feel great about how "thoughtful" the company is. Remember that all the generous donations are coming from the excessive profits to what are mainly plundering industries. Almost nothing can be made without taking resources from somewhere. The best we can do is look for companies who use recycled goods that use energy efficient processes.
It also seems many socially responible companies are often owned by the employees (but I am not thinking Walmart).


Debbie M
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Post by Debbie M »

Yes, another strategy is to invest some money in the bad things. Then at least some of the profits get used for good (you), and if there aren't any profits, that's good, too.
Frankly, unless you're buying a start-up, I'm not sure that investing socially makes you less of a problem. It's more important what you do with your spending money.


Debbie M
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Post by Debbie M »

Oh, and one advantage to investing in icky companies is that as a stockholder you have more say than as a mere citizen.


Marius
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Post by Marius »

Profitable investing is difficult enough as it is.

So I'm going to start off with regular investing and may only pick up some "ethical" investments later if I can do so without losing FI. I admire the idealism, but to me ethical investing is a luxury.
I have the impression that ethical investing is mostly popular with the crowd that has no money or hates it. But that may just be a prejudice on my behalf. :)


OurLifeInc.
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Post by OurLifeInc. »

Well, my interest in ethical investing was more or less the idea that I could vote with my money. By choosing to not put money into organizations that are not sustainable or do not pollute or whatever the criteria is, then it would help further those causes.
But Debbie, you make an interesting point...sort of taking the profits from firms that may be less than responsible and using that money frugally and to free myself from the rat race. Then using future profits in a socially responsible way. It's an interesting paradigm shift. Thanks for your perspective.
My other question as it relates to this is how much do people follow trends, especially environmental or social, in their investing. It seems like we are at a turning point in time where sustainability and renewable resources are really becoming important. So to find companies who have a stake in that game seems like a positive trend for investing. If a company also paid a dividend...well then even better :)


B
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Post by B »

@Marius

I have that impression, too. It's the same sort of people who are well-meaning but choose only to act in ways that make no real impact. It's unfortunate. Just because the evil are powerful, the good think they must make themselves powerless.


OurLifeInc.
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Post by OurLifeInc. »

@B
I'd be interested in hearing your thoughts on why investing in so-called responsible companies would make someone powerless?
Certainly not calling you out...just interested as this is the first time I have ever researched a social component to investments. It's always just been return, value, health of the business, consistent and growing dividend, etc.
Or any other ways that one could act that could be "high-impact". Maybe I invest the way I always have and make an impact some other way...I'd be interested to hear your thoughts in that regard as well.
Thanks!


csdx
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Post by csdx »

I usually get the impression ethical investing is for people otherwise secure (or liberal) enough that they're willing to give up some potential profits for following their values (similar to people who are willing to pay the premium for responsibly raised livestock/poultry).
As an example, I know there's at least one specific Islamic fund. Apparently Islam has a tenant not to lend money with interest, so this fund avoids investing in companies which do.
Personally I don't currently have anything invested in 'responsible funds', but it is part of the criteria for individual companies I invest in. Partly because I think it should be, and partly because I see it as a good economic decision. Companies that are sustainable are likely to benefit from future government green subsidies, and less likely to be hit with fines or burdened with new pollution taxes (or even have a disaster ala BP).


B
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Post by B »

@OurLifeInc

Sorry for giving you the impression that I have any big answers to your very good questions. I was speaking in generalities. It's just a pattern I've witnessed: Smart and socially responsible people avoiding wealth, leadership, control or whatever you want to call power. The people I'm thinking of would avoid investing altogether. Investing is not punk enough. It's not real, man. I suppose trying to invest in responsible companies would be a middle ground approach: gain wealth, but not very much, and only with companies that make them feel good.
Is that stupid? No, you have to invest in ways that let you sleep at night, as Jacob puts it (though I think he was talking about the risk-adverse, not the green brigade).
I agree with Debbie M, investing wisely and using the money towards a good cause (you) to avoid larger evils (reckless consumption) is more coherent than not investing well and having to live paycheck-to-paycheck, that is, being powerless. That's just playing into the hands of those "icky" guys. One thing at a time.


Britz
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Post by Britz »

I bought a whole lot of Vestas shares some years back (top windmill producer), in order to invest ethically. Right now, they're worth half, due to sluggish recovery of global faith in economy but that's fine; I won't be needing the money in any near future.


jacob
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Post by jacob »

Blogged.


dpmorel
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Post by dpmorel »

Jacob - what about pension funds and other institutional investors?
The road less traveled, ethically driven individual investor can at least take solace that their paltry efforts have helped lay a framework for socially responsible investing that has pushed major institutional investment firms.
Because of this most big corporations now have board-level action plans for corporate social responsibility, carbon footprints, etc. Its pretty hard for them to ignore institutional investors, many have CSR/DJSI investment requirements. In fact most corporations don't need to be told that social responsibility = lower cost of capital, happier employees, higher sales, etc, etc. Unless they make cigarettes.
I think its definitely harder to invest ethically and make money, but that doesn't mean its useless and a waste of time.


il-besa
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Post by il-besa »

Some months ago a financial advisor proposed me to invest money in a very rewarding fund and gave me a brochure to read.
It was a US company doing life insurances settlement:

http://en.wikipedia.org/wiki/Life_settlement
After I read that, I horrified and I decided that I'd rather stay poor than give money to those folks... for me, this is the opposite of social responsible investment :)


Marius
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Post by Marius »

@Jacob "Just for fun..."

http://finance.yahoo.com/q/bc?s=VICEX&t ... =l&c=VFINX
Tempting, but misleading. :) If you buy VICEX at other points in time, results are less interesting.
2y ago: http://finance.yahoo.com/q/bc?s=VICEX&t ... =l&c=VFINX
1y ago: http://finance.yahoo.com/q/bc?s=VICEX&t ... =l&c=VFINX
I need to work on my crystal timing ball!


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