How can I make my investments reflect my values?
Is it possible to invest in way that is socially responsible, without giving up long term market performance?
We have found that these questions are coming up with greater and greater frequency.
But what actually is “socially responsible investing”?
Well, it means different things to different people. Here are some of the common issues that people have expressed an interest in.
Carbon Footprint & Climate Change
Companies that have the most negative impact on climate within their respective industries. This includes companies that release the most carbon emissions, have the largest carbon footprint based on their operations and/or products, and have been part of extreme controversies related to climate change. NOTE: This does not divest from all ties to fossil fuels.
Deforestation & Biodiversity
Companies that manage forests unsustainably and are offenders of biodiversity.
Pollution & Waste Management
Companies that create the most waste, are responsible for the most green-house gas emissions, do not use available recycled materials, create products that are difficult to recycle and do not implement a recycling program, and companies with a poor track record of managing hazardous waste or oil spills.
Companies that negatively impact the global water supply and are stressors to the world’s fresh-water basins. It also penalizes companies with no or poor-quality programs to reduce fresh-water consumption.
Companies with the weakest data privacy policies and data security programs, as well as those with government data sharing programs that are lacking transparency and thus cannot ensure due process.
Diversity & Inclusion
Companies that show the most discrimination, those taking little effort to ensure equal opportunity, currently have limited diversity and display limited effort to improve diversity, and companies that do not report diversity efforts.
Fair Labor Rights & Supply Chain
Companies with a history of unfair wages and unsafe working conditions, have experienced fatalities and significant injuries related to work conditions, have ties to child labor, have anti-union policies, and companies that use conflict minerals.
Corruption & Bribery
This indicator provides an assessment of the quality of the company’s policy to combat bribery and corruption.
Gender Diversity & Women Empowerment
Companies that do not have a woman on their board or executive committee.
Governance Structure & Accountability
Companies with questionable ethical track records, those that lack accountability for executives, and display poor transparency.
In addition to screening companies out, you can also express your values by tilting toward companies with better overall profiles based on several of the themes above, like owning more companies with a better carbon footprint profile or those with more proactive labor practices.
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