Your money is influential

You probably don't think that much about how influential your money is. You might think about it when you buy (or more likely don't buy) products. But what about when you buy investments? What about when you borrow money to buy a house? What about when you buy electricity? All these purchases add up and make a difference.

Check out these guys at http://www.ethicalinvestors.com. I have no connection to them, and I happen to live in the US, where the lingo is a little different. But they do point out how significant your investment dollars are, and the range and implications of that investment.

Your investments and corporate behavior

Just about everyone's portfolio has shrunk over the past year or two. We feel poorer because the market has lowered the value of our investment assets. This change has certainly affected my behavior and it probably has affected yours.

The same is true of corporations. When the market adjusts the value of their stock downward, they look inward and say "what should we be doing differently?"

As an individual, it would be hard to get the attention of any corporation by telling them you plan to sell 100 shares, thus driving the stock value down by a tiny, tiny amount. But, what if it were 100 million shares?

It's hard for individuals to envision, but when it comes to large pots of money (held in endowments, pension funds, mutual funds, and so on), there is in fact an active selling process between companies and investors. It is very much like the same company selling a physical product in a store. The company is disappointed if people don't buy the product, and eventually takes the product off the market.

The Point: Access to investment dollars can directly affect the behavior of companies. Individuals can influence this access in two ways: First, they can attempt to influence the investment policy of some of large investors (remember university divestment in South Africa in the 1980's). The second, which is relatively new, is through investment behavior of individuals.

I remind you of the problem that the corporaration couldn't care less if you sold your 100 shares, but what if it were 100 million shares?

Next time, a discussion of mission driven mutual funds.

The UN Principles for Responsible Investment

Earlier I reminded all of you about the influence University endowments had in bringing down the Apartheid system in South Africa. Students influenced the endowments, which in turn divested from South African securities.

A key reason for this influence is that university endowments are so large. They can move the market with their investment decisions.

In recent years the United Nations put forward recommendations called "Principles for Responsible Investment, available at http://www.unpri.org/files/pri.pdf. Targeted at large investors such as pension funds, mutual funds, charitable endowments, it explains professional methodologies for Environmental, Social, and Governance (ESG) investing.

Although there are several important points, one that stands out is the expectation among investment professionals--who, because of their substantial ownership in companies, are in a position to ifluence companies--that they can and should drive corporate behaviors and disclosures.

Next time I'll talk about how your own investment behavior can drive positive behaviors among corporations.

Animal Rights Investing: Does one size fit all?

The answer is no, of course. No more does one size investment portfolio fit that of another person than one person's vegetarianism match that of another.



At one extreme is the vegan agenda (which I respect greatly). The theme could be characterized as no usage of animals in any form in corporate activities. At the other extreme would be the animal rights agenda (which I also respect greatly). Here the positioning would be to utilize animals, but only when necessary, and never cruelly.



What's an investor to do? One answer is to bury your head in the sand. Another is to dig deeper into the data. A third--probably the best--is to do your best with the information you have. Rely on a financial advisor. Use online tools that help you make decisions. In the absence of a perfect choice, make a good choice.

You'd think...

You'd think there would be a website or a product or database that matches the universe of animal-friendly companies with their financial performance. Doesnt' seem to exist.

I did find an excellent list of companies that are cruelty-free, however. The list seems to focus on consumers who choose to buy products from that company, rather than looking at it from the point of view of the investor. http://search.caringconsumer.com/.

I suppose you could take this list and use it as your investing universe, and then identify which are good investment opportunities. Problem is that the universe of companies that make consumer products is a small subset of the overall universe of companies.

It is a start, however.

Animal Rights Investing

I came across this website article about investing to support animal rights. It is an excellent description of the kinds of considerations animal-rights investors should take into account. There is even a listing of some funds that could be considered prime candidates for such investments.

Of course, whether these funds provide attractive returns is another question. Historically it has been tricky to marry these two objectives in any reasonable way.

Investing with Honor

You can make a difference. When I was in college, students convinced university endowments to avoid investing in South African securities because of the Apartheid government there. Back then, only large investment funds--university endowments in this case--could afford to build prudent well-diversified portfolios. Now, with the power of the Internet and the availability of tools, consumers can make similar decisions with their own investment portfolios. The good thing is that now you don't have to take a bath doing it.