 |
 |
Cruelty-Free Investing
Is it ethical for individuals to condone or encourage the mistreatment of animals in the name of profit? This moral query need not conflict with economics: Just as you buy products made without harming animals, it is possible to shop for investments that don’t partake in animal testing or the manufacture of animal-based products.
Cruelty-free investing makes it possible to yield returns and invest in companies that meld social and environmental concerns into your financial decisions. This type of investing goes by many names, including ethical investing, socially aware investing, green investing, mission-based investing, and socially responsible investing (SRI).
Assuming your investments are made on sound financial choices, opting to put your money into cruelty-free firms should have no negative bearing on your earnings. In fact, companies that respect animals and their natural habitats often sustain positive public images, a draw for many investors. Companies that don’t betray the environment are also less likely to commit the kinds of ecological blunders that inevitably result in costly litigation.
Farm Sanctuary
believes it is possible to put your money where your heart is without
diminishing returns.
Choosing Your Criteria
First, decide on your definition of cruelty-free. If animal testing is
your basic criterion and you will be seeking outside assistance selecting
your investments, remember that some brokers and advisors differentiate
between testing done by pharmaceutical companies and testing conducted
by cosmetic firms.
Pharmaceutical, chemical, medical, and tobacco companies are known for relying heavily on animal testing. Extractive industries, such as oil, paper, mining, and gas drilling and refining, are notoriously toxic, as are nuclear-related industries. Still other companies pollute, use animals in entertainment, or produce traps, guns and other weapons, while building and construction companies often decimate natural habitats. You may want to avoid holdings based in companies that rely on underpaid, overseas labor.
Of course, you probably don’t want to invest in factory farming or fast food, steakhouses, or any other food animal restaurants. Other cruelty-infused investments include the clothing and fiber industries, since the production of wool, leather, fur, wool, down, silk, and other textiles necessitate cruelty and death.
So where can you invest your hard-earned dollars? There are literally thousands of successful companies that partake in wholesome business practices and promote environmental stewardship, including technology, telecommunications and natural foods companies, and manufacturers that specialize in cruelty-free clothing, shoes, botanical products, foodstuffs, and more.
Mutual
Funds
Mutual fund companies, which raise money from shareholders and invest
in a group of assets, should be carefully screened, as investment companies
use different criteria in determining cruelty-free. Many mutual funds
screen for a variety of issues; it is up to you to request written information
and a prospectus that spells out the funds’ specific screening guidelines
and where it stands in regards to cruelty-free investing options.
Take careful note of the written guidelines; review the primary sectors of the economy the fund invests in, and note if the guidelines are so vaguely written as to allow for investment in companies that harm animals and the environment. A simple online search can get you started on your quest and give you a good idea of the mutual funds committed to socially responsible investing. (Simply type ‘SRI investing’ into a search engine.)
Special
Sector Funds
You can opt to put your money into specific funds that focus on select
investment sectors. Some funds screen by detailed categories; for example,
animal welfare and environmental issues only; all issues other than animal
welfare; and environmental issues and animal experimentation.
There is a vast selection of cruelty-free, specialized funds to choose from. Most mutual fund companies offer an array of specialized funds and even have departments whose sole function is to screen companies for animal, environmental, labor, and other social exploitations.
Researching
Your Investments
If you’re interested in investing in a particular company, obtain
its annual report and research its stance on humane issues. If the company
is not socially responsible, keep looking until you find ones that are.
Call environmental and animal protection groups, search for cruelty-free
investments on the Internet, visit the library, and speak with other socially
concerned investors.
Numerous books can walk you through the SRI process, screening out unethical companies and pointing you towards specific investments, including socially screened mutual funds, stocks and bonds, venture capital, and community banks and loan funds. You can learn to prospect for small, leading-edge companies, and engage in shareholder activism to influence corporations to adopt socially responsible practices and create positive change.
Some investors look towards community investing, which puts people and communities first, investing in small businesses, jobs, affordable housing, and community facilities.
Some simple guidelines when reviewing potential investments:
Primary Sectors: Examine the sector of the economy where each fund devotes the majority of its investments. If a large percentage of its assets are in extractive, pharmaceutical, chemical, and other cruel industries, steer towards another fund.
Top 10 Holdings: Review the top 10 companies the fund invests in; that should give you a clear idea of where the fund stands on cruelty issues.
Allocation of Assets: Before you hand your money over to a fund, make sure its investments are diversified. Review the percentage of its holdings in stocks, bonds and other securities.
Using an investment advisor to do the research for you will cut down your inquiry time, but be aware that you’ll pay a fee for the service.
Yielding
Returns
Today, socially responsible investing represents the cutting edge of the
investment industry: SRI is no longer limited to tree huggers and animal
lovers. During the bull market of the late 1990s, social funds basked
in the same kind of double-digit returns as their environmentally unfriendly
peers. When the market swung in the other direction, social funds fared
no worse than other funds.
Many have done better, indicates Morningstar, an independent global investment research firm that tracks and analyzes social funds. Of 115 social funds tracked by Morningstar, 45 outperformed 75% of their category for 2001. Nearly one-quarter of the SRI funds in Morningstar’s database sport a 5-star rating-twice the rate of the overall fund universe.
During 1995, assets in socially screened funds and separate accounts accounted to little more than $160 billion; today, investments that integrate social and environmental concerns surpass the $2 trillion mark, representing one in every eight dollars under management, according to the Social Investment Forum, which offers comprehensive information, contacts and resources on socially responsible investing.
Cruelty-free investing is a logical step towards helping animals, their habitats, the environment, and communities, whether your own or one half way around the world.
Before making
any investment, please remember to ask for and study the prospectus; review
past performance, the category and strategy of the fund, and the size
of the fund’s holdings. Clarify your minimum initial investment requirements
and contributions, and any fees you are responsible for. If you have a
financial or investment adviser, consult with him or her before making
any investment decisions.