It was reported in Toronto that a large number of Canadians are looking to invest money. But they are looking to invest in companies that don't come with poor records relating to the environment or human rights.
In the past few years we have seen an increased interest in socially responsible investing. This is because more and more investors are looking to create and build portfolios that reflect their own values.
In January a report was released by the Responsible Investment Association, in it they discussed that over $1 trillion in assets had been by the end of 2013 invested in such. This was an increase of 68% on what was being invested 2 years earlier. The figure at the time was around $600 billion.
Today there are 3 factors that fund managers will often take into account when evaluating companies, to decide if they become included in a portfolio made up of ethical stocks.
The first of these being what kind of environmental track record the company has. They will look to see if they were responsible for any spills considered dangerous. Also they look to see if they have plans in place that allows them to offset their carbon footprint.
The next factor they take into consideration is the company's social policy. This will include health and safety of those they hire. Plus what their relationship is with the unions. Also they look at their track record with regards to human rights matters.
The final factor fund managers take into account are issues relating to their governance. They look at the diversity of the company's board of governors. Plus they also look at how a company will determine the amount to compensate its executives.
But there is one criticism that often gets laid at the doors when it comes to ethical investments. It is the idea that as an investor you give up a large amount of the profits so that you are able to abide by ethical standards. But this isn't the case. Research has shown that when investing in a diversified portfolio a responsible one performs in the same way as a regular one. But to see a healthy return you need to remain investing in such as long as possible.
For those who is at all interested in building such an investment portfolio, the type that reflects their own ethics. They should look for an adviser who specializes in this form of investment.