Zack Gross
Zack Gross

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Ethical Investors Choose Socially Responsible Funds 

Brandon Sun “Small World” Column, Sunday,  January 9 / 11

Zack Gross

Now that the holiday season is over, the next two seasons aren’t winter and spring!  They are investment deadlines (end of February) and tax season (end of April)! 

While many amateur investors let their professional advisers make the decisions on where to put their RRSP and mutual fund dollars, a growing number are deciding themselves to support ethical investment funds, where social and environmental considerations are included in financial decision-making.

Money, says a recent Globe & Mail article on investment, is no longer the root of all evil.  Socially responsible investment can be extremely profitable while making a positive difference in our society and around the world. 

Indeed, ethical funds have shown more staying power in recent economically challenged times than many regular investment plans. 

Ethical investors have two things in mind. 

In a negative sense, they want to avoid supporting companies whose activities may compromise the environment, personal health, human rights or global security. 

Thus, they do not want to invest in companies or funds that contribute to the tobacco or arms industries, resource extraction or sweatshop factories.

In more positive ways, they want to support companies, funds and organizations that do no harm or actually do some good.  These might include investment in community economic development initiatives, educational or training activities, or ethical, green and fair trade businesses. 

Investors are not always individuals.  Large amounts of investment funds come from institutions such as foundations, pension funds, unions, faith based organizations, universities and hospitals. 

Some would argue that their investment helps to make companies and funds more accountable and responsible, while being responsible attracts them to invest – a win-win situation! 

Making sizable investments in companies or funds, as these investors are able to do, gives them the power to raise issues at annual meetings and push for changes in policies and practices.

As a potential investor, there are questions that you need to ask your advisor.  It may be surprising just how little investment advisers know about the companies and funds they support, aside from how much they and their clients will profit. 

Some advisers may be inclined to write off any suggestion of ethical investment as not being profitable enough or that being socially conscious is not a “rational” way to make financial decisions. 

It is interesting that avoiding being a contributor to environmental destruction or violent conflict might be seen as irrational!

Look into fund names such as Ethical Funds, Meritas or the Sarona Global Capital Fund.  Ethical Funds and Meritas offer a larger return as they are national and global in nature. 

They have also been available for a generation and have a strong track record that can be researched.

Manitoba’s Jubilee Fund or Sarona may offer a lower return as they invest in people trying to start small businesses or use their skills in local community and Third World settings. 

A major new presence in this arena is Kiva, an on-line service which bills itself as “Loans that Change Lives
,” where people can invest in individual overseas projects.

Of course, there are many people who don’t have money to invest but do have time and energy.  They may be students, seniors or in-between. 

Non-profit voluntary organizations have lobbied the federal government for many years to offer a tax deduction to people who contribute time and effort to their communities.  Unfortunately, this has never come to fruition.  However, financial donations to registered charities are always welcome and do offer the return of a tax deduction. 

Donations to political parties offer an even greater tax benefit.

There are many ways that citizens, organizations and institutions can invest in the positive evolution of their communities and societies.  Avoiding investment in destructive processes is one way, and putting money into social and environmental programs is another. 

When investment deadlines come along next month, we will have a chance to improve our tax position, accrue a profit from this financial activity, and make the world a little better place for all.

Zack Gross works for the 
Manitoba Council for International Co-operation (MCIC), a coalition of more than 40 international development organizations.

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