In the weeks since the mass shooting at a Parkland, FL, high school, retailers and investors alike have sought to distance themselves from gun manufacturers. The world's largest asset management company BlackRock announced last Friday that it planned to offer index options that exclude firearms manufacturers and retailers to interested clients. Blackrock, which manages the retirement funds of millions of Americans, has also said that it is pursuing talks with the three major publicly traded American firearms manufacturers, American Outdoor Brands Corp
As big investment managers at last begin questioning the social and business practices of gunmakers, more individuals are confronting the difficulty of removing their money from businesses - including firearms manufacturers - with practices or policies that run counter to their morals. Individual investors, particularly younger ones, are more interested than ever in finding ethical ways to invest their money.
However, because of the nature of most individual investment today, it can seem difficult to avoid giving one's money to companies that have unappealing reputations or are known for unsavory activities. The bulk of most people's investments are in the form of long-term funds---many only have investments in their retirement funds, often coordinated through their employer. Most employers do not offer sustainable funds as part of their 401(k) or other retirement fund plans.
What's more, criteria for excluding companies from investment can vary from person to person, as well as between firms. In recent years, approaches to ethical investing often highlight environmental, social, and governance concerns, a trio of interests frequently abbreviated to ESG. Though many investors now use the term ESG to describe the concerns associated with ethical investing, there is no set standard for gauging a business's performance on these issues.
In spite of these challenges, investing according to social goals and moral principles is to some extent more viable than ever, with more information available on how companies and funds perform on ethical issues and more established money management firms offering ethical investment options.
In recent years, more information is available than ever to investors looking to see how a company or a fund measures up on ethical questions. Socially-minded investors can now employ services that offer ratings on how individual companies or funds stack up on ESG issues. As of 2016, the investment research company Morningstar Inc.
More investment companies are catering to individuals seeking to invest their money in socially responsible ways. One of a growing number of sustainable investing firms, Parnassus Investments screens every company in which it invests in order to ensure that the investment meets its ESG-based criteria for responsible investment. Ethical investors can now hire firms that explicitly consider social-responsibility issues in making their investments.
Newer investors looking for a simpler and cheaper introduction to investing can now turn to robo-advisors for accessible ethical investment options. The automated online investment company Betterment is now offering options for those searching for socially responsible funds, introducing an SRI portfolio option in July.
Directly controlling which stocks are in their portfolios is another, seemingly more certain way of ensuring that investors can avoid giving money to "bad" companies. Another robo-advising company, Wealthfront, is offering an even more stringent approach, allowing individuals with more than $100,000 in a taxable account to request the removal of specific companies in their stock holdings.
- https://www.nytimes.com/2018/03/02/your-money/why-its-so-hard-to-invest-with-a-social-conscience.html
- https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=31721
- http://news.morningstar.com/articlenet/article.aspx?id=745467
- https://www.parnassus.com/how-we-invest/responsible-investment-approach
- https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=116582346