Putting your money where your values are
VAKIS BOUTSALIS/for Metro Toronto
Investing money doesn’t mean having to turn your back on your values. In fact, aligning your social positions with your investments is a growing trend in today’s markets.
“In the last two, three, four years there has been a huge increase in socially responsible investing,” said certified financial planner Sucheta Rajagopal, speaking at the Financial Forums 2008 in Toronto. “It has grown in leaps and bounds.”
Socially responsible investing refers to the integration of environmental, social and governance concerns into the investment process.
In other words, a corporation’s track record — with the environment, whether it uses sweat shops, and how much money it hands to its CEOs — is taken into account before investing.
“Consumer dollars and investment dollars should reflect your social positions,” said Rajagopal, adding there are a variety of ways of incorporating these ideals into your investment decisions.
“There is no right or wrong way to go about it. It is important to consider what is right for you.”
According to Rajagopal, one of the most important tools for socially responsible investors is shareholder activism. This is when shareholders of a particular company bond together and make it known they want specific issues to be addressed by the board of directors.
“It is the working together aspect that really gives us power to make changes,” says Rajagopal
Another key factor to remember, says Rajagopal, is socially responsible investing does not have to come at a cost to your bottom line.
“Socially responsible funds are not outperforming other funds. But they are not underperforming, either.”
If you do your homework, you will be able to find stocks that are performing well on the markets and still reflect your social values.
“Toyota is now poised to be the largest car manufacturer in the world … That is in no small part due to the introduction of hybrid cars, and more fuel-efficient cars, things that the consumers want.”
As for why socially responsible investing has taken so long to enter the mainstream, Rajagopal pointed to the lack of information that was available to investors.
“Until recently none of the major banks offered any information with regards to socially responsible investing.”
As a definite sign the times are changing, Rajagopal pointed to Royal Bank, which recently launched its own socially responsible investing initiative.
- For more information visit www.socialinvestment.ca