by John McDonnell
Do you have some money to spare? Hoping to start some long term savings? You may be wondering if there’s any where better than a bank to place your hard-earned cash – especially if you want it to be invested ethically. In fact, you may even be wondering if any bank can be considered an ethical investment since they are likely to make loans to companies which you may have issues with. Building societies and credit units are probably a safer choice since they tend to loan only to individuals.
Over the last few years ethical banks have become more popular. Triodos Bank, which operates in several European countries, is one example. While all ethical banks screen out negative potential loans, Triodos goes further, making loans judged to be of social or ecological benefit. Wikipedia’s article on ethical banking has some good links. If you do use any of these banks you should ensure that there is a deposit guarantee in place. This is especially important where the bank is perhaps smaller than the more traditional banks in your country.
Money in a bank deposit account of course is safe, but with the current extremely low interest rate environment it’s also not going to grow significantly. Over the longer term it’s generally true to say that due to the effects of inflation the value of money in a bank will fall even if the amount of pounds/euros/dollars stays the same. With that in mind many people could look at other options.
One idea would be to use your money to increase the energy efficiency of your home. The cost of doing so will pay for itself over the longer term, and your energy bills will be lower. You’ll also be helping the environment. Many countries provide incentives to reduce energy consumption in the home. These cover, for example, new boilers, replacement glazing, attic and wall insulation and solar thermal panels. Again, depending on where you live some countries go further and have schemes to allow householders to sell surplus electricity from solar electric panels back into the grid, and you might even be able to find community based power generation schemes to invest in, sometimes with tax breaks.
A more traditional approach is to invest in a fund, probably if you are reading this – an ethical fund. So what is that? Firstly let’s clarify what a fund is. Normally it’s a bundle of investments made by some financial institution (possibly an ethical bank, but even mainstream banks are working in this area now) on behalf of a group of investors. As the value of the investments goes up and down, so the price of the fund fluctuates. You buy into a fund at its current price at the time, and as mentioned (but it can’t be mentioned enough) the future price may be higher or lower. Hopefully over the long term the value goes up.
There are many ethical and green funds which avoid placing funds in so-called sin stocks, usually those related to adult entertainment, alcohol, gambling, nuclear power, tobacco, and weapons. Conversely there are some “vice funds” which invest primarily in those types of activities. Research into the performance of both types of funds seems to indicate that neither has an advantage over the other so why not choose the more ethical option.
The problem for vegans with mainstream ethical funds is that they don’t necessarily filter on animal based farming or even animal testing. In fact, they will often be fully supportive of organic farming even where it includes meat and dairy. One of the few I could find specifically excluding animal exploitation was Kames Capital Ethical Equity Fund. The UK has an association for financial advisors which is specifically targeted at ethical investments and other countries may have something similar. Getting unbiased advice is a good idea – especially if you are investing a significant sum of money.
An alternative approach is to just invest in sectors which are unlikely to have any direct animal concerns. For example, technology funds, media funds (movie/TV), power generation, financial and potentially Green funds (but you need to check their position on farming and food production).
If you have the interest and some experience you could consider opening an account with a stock broker and individually picking stocks yourself. It’s not as hard as you might think. Most countries will have some on-line broker accounts that could get you started (e.g. TD Waterhouse). With that you might buy shares in vegan related (or simply non-animal involved) companies which you approve of. A very important word of warning though: Companies which are specifically vegan tend to be quite small and hence are a much riskier proposition than larger multinationals. Therefore, it would be ill-advised to put too much money into those types of stocks alone. You need to try getting a balance across multiple sectors.
So, get advice, understand what risks you are taking, diversify as much as possible and review your investments every few months at least.
This article is part of the Creative Commons and is free to publish under a cc licence.