Guest Blog Post

If you’re at all interested in taking a different view of money you’ll be more than interested in alternative ways of investing anything you do have without enriching corporate vultures who care only about their bottom line. Welcome then to the world of ethical or socially responsible investing. This is a growing area in the financial markets and allows you to make a return on your savings while walking away from the big financial institutions.

Your Money, Your Ethics, Your Choice  

First of all, it should be established in your mind that investment is not the same as saving. It typically offers the chances of greater rewards but comes with a corresponding increase in risks. You can save ethically too, the best way being through a local credit union that will promise to work for the good of your community. The question of ethics is a big and ultimately personal one. That’s why ethical investors are often much more committed to and engaged in where their money goes, perhaps it’s this engagement that makes ethical funds a better deal according to some experts.

You’ll find – as you look at this market – that you have lots of choice, both positive and negative. You can hand your money over to a fund manager who will promise to manage it ethically or sell you an ethical product. Or you can play the market yourself. That’s why most typical bank investment funds will not meet socially responsible criteria, they invest in a huge diversity of companies.

The negative choices might include not investing in tobacco companies, in arms traders or producers or oil stocks (carbon and climate change investing is a bit growth area in the sector). More positively, you can choose to invest in companies with a good green record, who work to do good in a developing company or who simple have excellent records for corporate social responsibility.

The Power of Banks

We all now know how powerful banks are. They can use that power for good or ill in their investment and lending decisions. If you allow your money to go to a bank who’s not doing the right thing then it should be on your conscience, although it’s a decision we all too commonly allow to be influenced by the understandable wish to stay safe with our finances (even now) and the difficulties or inconvenience of switching accounts. If you want to stop propping up the same old system you need to move your money from the same old banks.

A Growing Movement

In 2012, for every $9 invested in through managed funds in the USA more than $1 was in an ethical fund. Research is starting to suggest that these funds do better than the market in general. There are a huge variety of ways to invest your money responsibly. For example, community investment will keep your money in the country doing good work in poorer communities. If you move from funds you can pick your own ground. Perhaps you’d like your money to help stop the spread of HIV? The Female Health Company produces contraceptives with this end in mind, or, if you want a fund, then Christian Brothers Investment Services promise to help tackle drug abuse, and a lot of disease is spread through shared needles. Think of it as giving to charity but with a return for you too, a double win. Even in the growing emerging markets sector you can choose sustainable fund that only hand over your money to companies who consider the environment as well as the return.

Beyond Investment

Money gives you a voice, certainly a louder voice. It’s a sad but true reflection of our democracy but it’s one you can use to further your own aims for the wider world. Once you invest in a company you have a voice on how that company behaves. Once there’s a large number of you that’s a loud voice, typically expressed at the company’s annual meeting. You can campaign, you can influence, and you can seek the thing that a company hates more than anything else, bad publicity. America’s diverse and widespread share ownership gives American shareholders greater opportunities in this area than in almost any country on earth. The internet’s unparalleled use as a networking tool gives them a new forum in which to fight their battles.

If you want your money to do good – as well as to do well – you need to be on top of what it is doing.

http://blogs.law.harvard.edu/corpgov/2013/12/03/shareholder-activism-in-the-us-banking-industry/

Originally posted 2015-03-17 00:52:03.