I’ve saved up some amount of cash, but family is poor and hasn’t had useful advice. I feel like the stock market hasn’t been great for society, but surely there are some causes who would use the capital for good (and give it back when I need it later)? I have a half remembered portfolio from a previous union with a big war chest, but it doesn’t feel actionable.
I’m in North America + UK; but answers globally I think are interesting.
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Just stay with ETFs. If you have a lot of money (unlike me) and too little experience in investing (just like me), you can either place a safe bet on ETFs, or you’ll see your hard-earned savings disappear into thin air right the fuck quick.
I mean, broadly speaking, you’re always going to be a drop in the ocean as an individual investor. So you’re not really investing ethically so much as investing to feel better about your choices.
That said, if you’re interested in operating as a VC or Angel Investor, you can find (or even cultivate) entrepreneurs in your neighborhood. The risk is high. And the ROI probably isn’t great. But you do get the satisfaction of contributing to the community, encouraging commerce you find ethical, and “job creating” in the literal sense.
I do feel like this treads the line between investment and simple philanthropy, though. Certainly not something I’d recommend for someone with a portfolio in the four or five digits, much less someone who has this money earmarked for retirement or some other explicit long term savings goal.
Check out the Calvert series of ETFs in the US, they have rigorous screening but still give you good diversified exposure to their targets. ICLN invests in clean energy worldwide, GRNB or BGRN target green bonds. CCSO is an active fund seeking to invest in climate solutions that are more industrial or address broader areas than just clean energy.
Its a tough one. Its a bit riskier because the safest thing is to be broadly diversified. Which is hard the less you have to invest. There at least use to be a microloan thing where they pool peoples money to use to lend to individuals in poor countries to buy things that would allow them to make money. sewing machine, bicycle, whatnot. It had this structure where they used the community to sorta police it (loans would not come to the community if payments were not being made). They charged interest enough to make up for any defaulting or such and still make some profit. Besides that there are a variety of moral funds that have specific rules but what they do is based on the fund. some avoid companies contributing to climate change while others avoid alcohol, cigarettes, or gambling and maybe another avoids weapon manufacturers. The thing is from what I can tell its hard to find one that is not investing in something that would be considered bad to another. You could straight up buy stock in businesses you do not think are to bad.
Dunno about America, but there is a local coop group near me that builds solar farms and let’s members invest. You get a bit of the profits and you’ve helped fund a good thing. The returns aren’t guaranteed, but then again nothing is.
Diversify, find etfs that are exclude investing into specific sectors like defense. Look for those investing into new green technologies etc.
Research “value investing.” A lot of the stock market is pure speculation but it is very possible to invest in businesses who run a “good business”, meaning they’re more concerned about long term sustainability than maximizing their share price right now.
The Intelligent Investor, by Benjamin Graham
Required reading for any investing newbie.
Idk if this gets you ethical investment. But it at least lets you focus your investment cash on businesses you can expect will see a material ROI, rather than just throwing money into enterprises with a glitzy front page and sour financials.
I’d like to tell myself that ethical investing would also… actually do stuff? Move numbers?
If you’ve got enough money, and you don’t step into any big scams, sure.
But the first is hard and the second is arguably even harder. The Tech Sector was flush with greenwashing under Obama, for instance.
You could look into ESG and SRI funds. There’s no guarantee they will keep their value, but they are relatively easy to liquidate if you need the value converted to cash.
You can sink capital into community infrastructure to use it for good, but you might not be able to liquidate it easily (or at all). It can be still be considered an investment, if you actually to value the good that the infrastructure does more than you value the capital expended. If your value is only “cash value”, then it’s not an investment, but it still might do good.
Good luck finding something. I’m in various ESG funds until I hit “my number” and then I will start directing all the capital I have in excess of “the number” to “good” that’s not under my control, primarily through normal, no-strings-attached donations to local charities in my community.
BEHOLD! I have actually somewhat looked into this.
So, for buying stock in publicly traded companies, no, you basically can’t make the world a better place that way. Not because “companies must do what is best for shareholders by law” (iirc, this is more of a guideline than anything). But rather because if all the ethical people invest in Solar Panels and Gender Affirming Care For Everyone Inc, then all the ethically neutral money (which is almost all of it) will simply shift more towards Torture Palistinian Orphans Inc. Because everyone is investing based on value relative to price - so rational investors flee the “overinflated” prices of companies with ethically laudable missions. It’s like trying to lower the level of the ocean by filling up an 5 gallon bucket and dumping it down your toilet. You aren’t making a difference. Other water is just going to fill it up. If you want to invest in stocks, just invest in a broad market, low fee index fund, forget about it for 30 years, and forget about your ethical concerns.
If you want to invest in something that improves the world and makes you money, your best bets are
(1) Small local investments. You’ll have to dig here, but there are probably investors in your area who are getting together to give out small business loans. You are basically angel investors, but instead of funding Uber-But-For-Burritos, you are helping that guy in your neighborhood who is good at fixing things start his appliance repair business.
(2) Investing in yourself and your own business. Like, make a restaurant that gives out free burritos, or a clothing company that donated fancy hats to anti-Trump rallies. Its hard for a business to be really unethical when you’re the one running it
But rather because if all the ethical people invest in Solar Panels and Gender Affirming Care For Everyone Inc, then all the ethically neutral money (which is almost all of it) will simply shift more towards Torture Palistinian Orphans Inc.
So, there’s reasons why “ethical investing” doesn’t work well in practice, but this isn’t really one of them. Industries enjoy a networking effect and efficiencies of scale. Lowering the investing costs of a target industry will naturally improve their growth prospects. And a rising stock price can lure in growth-focused future investors, because investment cash is often dumb and prone to following trends rather than raw performance metrics.
If Good Guys Banking plans to throw $50B into solar panels over five years, that will drive up the price of solar stocks, drive down the cost of solar panels, and proliferate the number of installers and maintenance techs, all of which improve the long term economic prospects of the sector. Neutral investors will want to beat Good Guys Banking to these stocks (accelerating growth of these companies, employment in the field, etc). Retail customers will see more advertising, more local retail sales, and more of their peers getting panels installed, which will induce more spending. And competitors will seek to diversify into Solar in order to capture these gains.
Your real problem is that you’re not a bank with $50B in investing cash to toss around, much less the sophistication to know which solar companies stand the most to benefit from the sudden infusion.
(1) Small local investments.
(2) Investing in yourself and your own business.
Definitely also good choices. But for the same reasons. Local investment has the double-benefit of ramping up your local economy and providing yourself and your neighbors with more privatized amenities. But it is also riskier. If your neighborhood goes into a downturn, you’re both at risk of unemployment AND big investment losses.
Self-investment has the same problems, only magnified. You’re putting all your eggs in one basket. It’s also much more of a tax on your time, as spending more on your own business means managing more assets and staff directly. If you don’t see profit in this investment, what you’re doing isn’t going to compound your savings.
Thanks to both!
So, there’s reasons why “ethical investing” doesn’t work well in practice
Could you say a bit more on this?
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Very difficult for an outside investor to gauge the ethical practices of a business outside the broad brush stuff (war bad, solar good, etc)
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The volume of cash you’re investing is likely a rounding error on a rounding error for the business, nevermind the industry as a whole, so you’re unlikely to shift behaviors with your choices
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Ethical investing is riff with affinity scams.
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It’s hard to gauge long term net benefits of an investment decision, which can lead to “Longtermist” style behavior.
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There are things like microloans you can participate in where you loan very small businesses money to get them off the ground or stay funded for another month and what not.
I don’t believe you make money, so I don’t know if that is considered an investment in that regard, but you are investing in individuals and their communities.
I searched quickly and Kiva looks like it can give you an idea how microloans work. I have no experience with them, I just know this type of program exists.
Alternatively, fund and/or participate in a local charity. I volunteer time and give a humble donation to my local wildlife rescue, but you could also donate or work at your local food pantry, women’s shelter, Food Not Bombs, etc. Again, no money back, but it’s investing in your community and you can see “dividends” from that.
Any investment where you get more money back than when you started has strings attached, so that’s an ethical consideration.
I’ve been on Kiva for years. It’s legit, but you only stand to lose money. There’s no cashing out (at all, afaik).
You lose money 2 ways: donating to Kiva operations when you fund a loan (it’s optional though), and defaulted loans. If that guy in Madagascar doesn’t repay the loan for his seeds and fertilizer, it’s just gone.
If the loan is repaid (and you get periodic emails every time they make a payment with some banal statement about how grateful the borrower is), Kiva adds it back to your account and you can relend it.
I’ve been completely hands off for the last 5 years. It just automatically re-loans when I have funds in my account and I get an email. If enough people default, I’ll have to decide if I put in more money or call it quits.
That’s pretty much how I thought it might go. Like, it sounds good in principle, but for one reason or another, they’re people banks won’t lend money to for profit. I’d have to think it’s just inherently more risky. If one can afford to bet on people and accept the risk, I think it’s great some people can get help and hopefully improve their situations.
I like donating local as I can see the people, and in my case, wildlife, that is being helped, and I can also see exactly what their needs are and how they’re being filled. It gives me complete confidence where my donations are going, and that makes me happy with knowing I’ll never see any of that money come back my way.
Like any other investing, one just needs to determine their risk acceptance and have a clear idea what they expect to get out of it.
“No,” and “yes,” and “maybe.”
No: Public companies have to maximize profits for their investors–everything else be dammed. That means your investments are not really able to go to a “good cause” if trading publicly.
Yes: Private companies may allow investing in the company if you work for them. If you have a job with one that’s socially conscious you can invest directly in that. Private companies do not need to maximize profits.
Maybe: You could look into microloan platforms. I haven’t checked the efficacy of any in particular, and you won’t make much, but there are some causes that’ll be directly impactful.
Are there any local financial cooperatives?
At home there’s a cooperative that’s for small scale local farmers and small businesses to be able to get loans. Money invested only makes itself back at the rate of inflation plus a tiny amount.
It helps local small businesses, and is better than having it in a bank :-)
It’s hard to “do good” while also making a profit. But it’s a little easier to not be evil, not support evil, and still be responsible about earning enough to support yourself when you can’t work (now or when you’re old) or have an unexpected need for cash. For instance there are socially responsible stock-market funds that exclude the worst companies, but you’ll want to check for your priorities like climate or worker exploitation because they vary in what they make compromises on.
I left Us stocks nearly a year ago when the smell of decline started (and I will easily resist the upcoming IPO shit shows of the AI bubble). Went into gold and it has been successful for the time being. Decided to invest into tourism next, because the vain in the world won’t cease.
Ethically investing? No clue mate
