First Person: Investing With a Conscience

Yahoo Contributor Network

I've heard that ignorance is bliss. When it comes to investing with a conscience, I believe that to be true. When I research the companies that I am partnered with as a "shareholder," I become inevitably disturbed by their lack of transparency, ethics and morality. Big business and money don't appear to mix with values and virtue. In our capitalistic world, it seems like it's all about money. But, to me as an individual, making money isn't as important as helping people.

Being a more responsible investor

I recently read a "Socially Responsible Investing" report published this year by TIAA-CREF. The report encouraged more disclosure on climate change issues as well as non-discrimination. While some people are concerned about matters such as global warming, other people don't want to invest in companies that do not share their religious convictions or values. I've invested in the past in ETF or exchange traded funds that fall under the category of "faith-based funds." As an investor, I think it's important for me to be responsible about how I direct my money.

Holding the ultimate authority

According to an article in the Graziadio Business Review, shareholders should not underestimate their power in a capitalistic system. Shareholders have the ultimate power over corporate conduct. The article pointed out that there is a huge market for Socially Responsible Investment or SRI. Some of the issues considered when screening companies for inclusion or exclusion in an SRI include defense/weapons, gambling, alcohol, tobacco, community relations, community investment, employment equality, human rights, labor relations and animal testing. I think investors can create even a greater demand by refusing to invest in companies that exploit and corrupt people.

Sacrificing returns on my money

According to the article in the Graziadio Business Review some experts say it's a misconception to say that socially responsible investors are sacrificing returns. SIR investing does not necessarily lead to underperformance. It's still possible to have a diversified portfolio that excludes unethical companies. I'm always interested in researching different faith-based funds as well as various SRI options. Some experts suggest the faith-based funds have higher expense ratios because it's more expensive to screen companies. To me, I wouldn't mind sacrificing a bit of my return if it meant I could sleep better at night.

I know I don't want to make money by being a shareholder in a pharmaceutical company that knowingly made money by selling a dangerous drug or a company that ignored manufacturer defects in order to make a bigger profit. I think it's great when people invest in mutual funds that only invest in firms that share their core religious values or prove they have an ethical track record. It's difficult to make a change as one person, but as socially responsible investors, it's easier to make an impact.

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More from this contributor:

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