A conscious approach to investing can affect the way the world goes around.
Amy Domini| July/Aug 2007 issue
Socially responsible investing has grown a lot in recent years, both in scale and in influence. But many people still find it incomprehensible that we should think about anything other than profits when we invest our money. Yet it shouldn’t seem so strange. In a way, what we’re seeing in the rise of ethical investing is simply the financial equivalent of the rapidly increasing interest in wholesome organic food.
Many people these days understand that when you’re buying food, price is not the only consideration. It’s also important to think about the additives and pesticides you’re putting into your body, about whether certain kinds of fish are being driven to extinction and about how the people who grow your vegetables are being treated.
People are beginning to ask similar kinds of questions about their investments. By putting their money into the stocks of certain companies, and then pressing those companies to do the right thing, and directing capital to communities that need it, investors are starting to create change. Being a conscious investor is a lot like being a conscious shopper.
Once people realize certain options are open to them, they start down paths that can transform their lives. For instance, one of my local supermarkets specializes in healthy and organic food. I was first attracted to it because of the wide selection of fresh fish, beautifully displayed on crushed ice. Returning frequently to the store, I started paying attention not only to whether the fish looked and smelled good, but whether it was caught in the wild or farm-raised using organic methods. Eventually I started seeking out fish that was caught or raised locally. The choices the store made available actually turned me into a more conscious shopper. By creating conscious shoppers, this store and others like it were building demand for a whole new way of producing and selling food.
Something similar happened to me years ago when I was working as a stockbroker. The financial industry often assumes that investors care about nothing but making money, but as I got to know my clients I realized there was more to them than that. They cared about a lot of things—the forests and birds, issues of war and peace, their children’s health—in addition to making money. So when the day came that I was asked to recommend a company that was on the verge of getting a big military contract, I realized I didn’t want to ask the compassionate people who were my clients to invest in killing machines.
Like many important ideas, this one was pretty simple: The way you invest your money matters. If you’re a doctor or care about health issues, it makes no sense to invest in tobacco companies. If you work at a shelter for battered women or feel concerned about domestic violence, it makes no sense to invest in liquor companies. If you’re a birdwatcher, it makes no sense to invest in pesticide manufacturers that kill birds. That’s when I really started connecting the dots.
It became obvious to me that we should invest our dollars according to the same values that we use to live our lives. We should talk to the companies we invest in about what matters to us, and encourage them to improve their conduct and lessen the negative impact they have on the world. Whenever possible, we should invest in communities where our money can help people buy homes and start businesses.
More and more, people are deciding this is the way they want to handle their money. As the idea of responsible investing has grown, we’ve developed investment standards and research methodologies that have broadened our impact on a number of important issues, from fighting sweatshops to promoting diversity to reducing global warming. By establishing standards, we help investors define the kinds of behaviour they hope—and expect—to see from the corporations they own, and sometimes to say, “I don’t want to make money that way.” By doing the research, we ask companies the questions that no one else asks, putting important issues on the table for discussion; our goal is to start a conversation about the kind of world we want to live in. And the conversation doesn’t end when we’ve decided whether or not to invest in a company. It continues when we engage with the companies we own as active shareholders.
One recent example brings us back to the supermarket. It involves the international coffee crisis. Families of coffee-growers were going hungry in many countries because the prices the growers received for their crops in the world market no longer covered their expenses in growing the coffee. After dialogue with Procter %amp% Gamble, one of the companies in which my socially responsible fund invests, the company agreed to begin buying Fair Trade coffee, which guarantees the growers a minimum price per pound. It’s now one of the major U.S. buyers. Of course, conscious shoppers who seek out Fair Trade products create the demand for this coffee and play an important role in supporting peasant coffee-growers.
As we sometimes say, money makes the world go around. A conscious approach to shopping and investing can profoundly affect the way that it makes the world go around.
Amy Domini is the founder and CEO of Domini Social Investments, and author of several books, including Socially Responsible Investing.