ETHICAL INVESTING: LOOKING INTO ETHICAL INVESTMENTS
For studying socially responsible investments, the key word is ethics, of course.
View every corporate website you know. Most of these sites designate a section on sustainability. But do firms practice what they preach? Or, is it really true? Yes, this is a good place to begin your research, but you should not stop there. Take note publicly traded companies have two websites, one for consumers and one for shareholders.
You will find some of these details in their website: community impact, commitment to employees, environmental responsibility, and human rights. So, be cautiously optimistic. Entities may either disclose their ethical standards or conceal their unlawful or inhumane practices. Remember, corporations tend to be flowery with these information to attract more customers and command higher prices for their products and/or services. That is why investors should not depend on their website alone. Double-check the information on their site by verifying it with reliable third parties. For example, read news articles on the firm’s activities/projects.
Good thing due diligence has been made easier. The following tools and websites can help investors screen for ethical investments:
- American Customer Satisfaction Index – Although it is not particularly designed for ethical investors, the index displays the companies that consumers are happy with and performing well financially. ASCI evaluates the satisfaction of customers with a company by assessing their complaints, loyalty, and projections, as well as perceived quality and value.
- Calvert’s Know What You Own - The service enables you to search any mutual fund, select a significant issue, and see the companies within the fund which do not adhere to the criteria.
- Calvert Social Index - Beginning with America’s 1,000 biggest companies, the index narrows down the list by reviewing their performance in several aspects, such as community relations, environment, government and ethics, human rights, indigenous people’s rights, internal operations, product safety and impact, and workplace.
- Forum for Sustainable and Responsible Investment - Individual investors can compare socially responsible mutual funds based on cost, performance, and voting records. Performance data are provided by Bloomberg, so individuals can determine whether a certain fund excludes investments in some categories, seeks investments with a positive impact, or avoids poor performing ones.
- Global Reporting Initiative – GRI collates the social responsibility reports of companies. The organization has developed a framework to advise corporations on the potential issues the general public seeks to know, including the environmental fees paid by a firm and percentage of employees covered by collective bargaining agreements.
- Social Funds’ Corporate Research Center - This site allows people to look for an entity’s social responsibility profiles. Users can also find latest news relative to sustainable investing.
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