Investing with a moral compass means serious research, says Steve Hart.
When Prime Minister John Key got caught this week with a fist full of shares in a firm that mines uranium he couldn't flick them on quick enough.
It appears he bought the Jackson Mineral shares when the Aussie firm was mining gold. But to some people this activity might
be just as unethical as drilling for oil or cutting down a rainforest.
But how close should one look when buying shares? And even if you do go for a "green" investment, such as a wind turbine company, the components it uses may have come from a company that pollutes the atmosphere.
Dr Robert Howell of the Council for Socially Responsible Investment says it is impossible to find the perfect ethical investment and that people have to make a judgment call on where they invest their money.
"There are two ways in which people can bring about change," he says.
"One is to buy shares in a firm and use voting rights to change the behaviour of the company. Another is to only invest in companies that make a positive change to the world."
Howell points to General Electric which he says was forced by shareholders in 2002 to alter its production processes and reduce its environmental impact.
However, he says finding ethical or socially responsible investments (SRI) can be difficult as "most SRI funds are unethical".
"For example," he says, "some funds will exclude investment in tobacco companies but include everything else and promote themselves as socially responsible investments.
These SRIs could include oil, armaments and mining. SRI is such a broad definition, in that it includes investors who are concerned only about one type of behaviour, such as tobacco or nuclear weapons."
Howell says to select an SRI fund you must decide what is important to you and that selecting a New Zealand fund might make it easier to obtain information.
"However, investors need to keep in mind that New Zealand represents less than 1 per cent of total world sharemarkets."
He wants to see investors move away from companies that harm the environment and society.
"When there are businesses that are addressing climate change and resource depletion, helping produce food that is safe, protecting our water, providing houses that are ecologically sound [and] developing energy-efficient products, why are we still investing in those who choose to ignore their responsibilities?"
Howell says the number of New Zealanders investing in SRIs is small, but that there is an awareness of the options.
Jeff Matthews of investment firm Spicers says the baby boomers are leading the way and starting to question where their money is being invested.
"Ethical investors are normally older people, around 45-plus, and take an interest in where their investment money goes," he says. "People now look at things such as the working conditions of the people who make the clothes they buy, for example.
"But not many firms in the country offer ethical investment products. However, what one person finds acceptable may not suit someone else's values.
"Sharebrokers won't normally have a clue as to the sustainability policies of the firms they invest their clients' money in. They won't know if any given firm is dumping toxic computer parts in China or running sweatshops in India.
"And they probably won't be interested in people who turn up saying, 'I've got $200 a month to invest and don't put my money in this list of firms'."
And the people with money have the real power when affecting change, he says.
"It's easy being a 22-year-old tree hugger concerned about the environment, but not having any money to invest."
However, Matthews says the number of people taking an interest in where their money goes is starting to increase.
"It's a growing trend as people look to invest in alternative energy sources. Once, a person who dug a mine or cut down a forest was a go-getter, a hero. But that isn't the case any more."
Ethical investments:
SRI Funds
* Asteron
* Socially Responsible Investment Trust
* Prometheus
* Ethical Finance
* Quaker
* Investment Ethical Trust (QIET)
SRI KiwiSaver Funds
* ASB Firstchoice KiwiSaver - Global Sustainability Fund
* Asteron - KiwiSaver Socially Responsible Investment
* SIL - (ING) KiwiSaver Sustainable Growth Fund
* Fidelity - Life Ethical Kiwi Fund
Source / Council for Socially Responsible Investment
