Do you have a problem with the fact that Woolworths owns poker machines? Or object to companies using sweatshops in Bangladesh?
Maybe you’re concerned about the environmental impact of big mining projects?
Whatever your ethical concerns, would you let them get in the way of your profits?
Investor and author Kassia Klinger says you don’t have to choose between your morals and your money.
She makes a comfortable living on the returns from her investments – she has no financial need to work – none of which compromise her ethics.
“If you’re not getting returns, that’s not an investment, that’s philanthropy,” Ms Klinger says.
“But if that investment is degrading the environment but making money, or hurting people and making money, then I wouldn’t consider that an ethical investment.”
Ms Klinger began investing in 2001. Her father had died and she was helping her elderly mother take care of the family investments when she heard about ethical investing.
Risking the family’s portfolio, she saw an ethical investment financial planner and only invested in companies whose activities did not compromise her values. Her decision paid off.
“Our family was a bit of a guinea pig and I’m grateful to my sister and my mum for allowing me to risk our inheritance,” Ms Klinger says.
“If you look at the trends, a typical ethical investment portfolio went up when the market went up and our family portfolio has been the same – when the market went up, we went up, when the market went down, we went down.”
Ethical investing will mean different things to different people, Ms Klinger says.
For her, it meant getting rid of the family’s shares in mining giant BHP Billiton and supermarket chain Woolworths because of their heavy investment in pubs and clubs.
“The combination of alcohol, tobacco and gambling basically ruled Woolworths out of the portfolio but each individual can make their own determination,” she says.
“A strictly Catholic investor might chose not to invest in a company like Ansell, who is one of the big condom makers, that’s their moral code.
“I invest in Ansell because that issue doesn’t concern me.”
Ms Klinger says the key to ethical investing is to get independent advice – which is hard to come by given 80 per cent of advisers work for or are owned by the big four banks or AMP – and do your own analysis.
Details about a company can be found in its annual reports but news stories and reports by charities and non-government organisations can also tell you which companies are involved in unethical behaviour.
Australia’s ageing population means it’s never been more important for people to get clued up about how they invest, Ms Klinger says.
And for those who think this doesn’t apply to them, remember that superannuation is an investment and some super funds provide a socially responsible investment option.
“Everyone knows we’ve got an ageing population and we’re about to experience one of the largest transfers of intergenerational wealth in the history of humanity, so you can imagine companies that make a profit from selling financial products are desperate to get their hands on this,” Ms Klinger says.
“It’s not in their best interests that consumers are empowered which is why it’s really important that we ask questions and learn and know what to ask and be aware that just because a financial planner works for a big, safe bank, they’re not necessarily working in your best interests.”
We need to stop burying our heads in the sand, Ms Klinger says.
“I’ve been to Borneo to see the palm oil plantations and how they have to rescue the orangutans just so we can have beautiful make up, it’s awful and appalling,” she says.
“It’s very very convenient not to know, we’re at the end of the supply chain, but ignorance is not always bliss.
“People get it about Bangladesh, they get it about the orangutans, but where they don’t join the dots is when they say, `oh, it’s only $9 for this t-shirt, made in Bangladesh’.
“When you do the right thing, you win as an investor, society wins, the economy wins and the environment wins – it’s not a zero-sum game, we can all win.” AAP
* Confessions of Ethical Investing, by Kassia Klinger, is available now. RRP $24.95/ebook $9.95.
Read more at http://www.gold1043.com.au/living-finance/How-to-make-money-and-keep-your-morals#vZYyFRCfj5WDVgFL.99