Investing with Purpose


The purpose of life is a life of purpose – Robert Byrne

Increasingly I’m having conversations with clients about socially responsible or ethical investing. I’m not sure if we’re becoming more socially and environmentally conscious or it’s just the demographic of who I’m talking to.

It got me thinking about the potential conflict between how we invest and how we give money to causes we care about. Two of the biggest companies in the world are tobacco companies – Philip Morris International and British American Tobacco. If you’re invested in an International Share fund, there is a pretty good chance you have a small allocation to one of these two.

Many of us give money to cancer related charities. Medical research for a cure, support services and incredible people doing their best to make the life of those suffering from cancer somewhat easier.

I’m invested in a tobacco company and I’m giving money to support those suffering from cancer. When you say it like that it sounds ridiculous. I don’t know, maybe you can justify it like the government does – making money from it so you have more to give to those suffering from it.

Do you consider what type of businesses you are investing in? When you invest, are you entirely focussed on returns or do you want to know that the companies you put your dollars into are aligned with your values.

The Responsible Investment Association Australasia  (RIAA) defines responsible investment as “a process that takes into account environmental, social, governance (ESG) and ethical issues into the investment process of research, analysis, selection and monitoring of investments.

If you decide that socially responsible investing is for you the hardest part can be finding a fund manager with an approach that matches your beliefs. For example, do you want to:

  • Exclude specific industries such as tobacco, gambling, firearms
  • Exclude specific companies such as those who use child labour or have been fined for polluting
  • Exclude businesses who finance or trade with companies who you are ethically opposed to

It can be difficult to achieve the exact outcome you are after. However these are questions that should be asked when developing your investment strategy.

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