Ethics and investing?
Julie Maltby strives to leave a light footprint on the planet. The 43-year-old communications and alumnae relations officer at Brescia University College in London, Ont., recycles and composts. She nixed grass for her yard in favour of low-maintenance landscaping that “doesn’t deplete water resources.” And she doesn’t wear anything that has been tested on animals.
But when Maltby took a look at her investment portfolio a few years back, she admits she knew very little about the companies she had invested in. Did they have good human resources practices and make products that were safe and environmentally friendly? She had no idea. “That didn’t sit right with me,” she says. “I want to invest in companies that agree, as I do, that we all have to be socially responsible in everything we do. It’s not okay to wear the banner sometimes and not others, according to whether it suits you.”
When Maltby’s financial planner seemed uninterested in dealing with her concerns, she switched, opting to go with London, Ont.-based financial planner Johnny Fansher, who specializes in what is called SRI (or socially responsible investing). Basically, it involves rating companies not just on their financial performance, but on ethical considerations as well. “I thought it was important to put my money where my mouth is,” says Maltby.
Ethics and investing?
A growing number of people agree. Spurred on by concerns over everything from climate change to international development, the SRI industry is booming, according to the Toronto-based Social Investment Organization (SIO). In fact, from 2004 to 2006, the amount of assets invested using socially responsible guidelines grew from about $65.4 billion to a hefty $503.6 billion, with massive pensions funds such as CPP Investment Board, Caisse de dépôt et placement du Québec and British Columbia Investment Management coming on board. Even the big banks are beginning to add ethical funds to their offerings — a sure sign that such investments have hit the mainstream. Says Eugene Ellmen, executive director of SIO: “It took awhile to get the message out. But I think people are starting to realize that when they invest in a company, they are effectively endorsing what it does.”
The only problem: Deciding to invest with your conscience adds another level of complexity. Now, quite apart from taking into account whether a stock or mutual fund is going to speed you on your way to a cushy retirement, you’re forced to also consider social, environmental and/or governance issues. Here’s what to keep in mind to build a portfolio that truly reflects your beliefs…and doesn’t cause you to lose your organic cotton shirt in the process.
