Investing used to be a soulless enterprise – out of sight, out of mind.
However, in today’s technology-centric age where there are more cell phones than there are people and with social media, very few things go unnoticed or undocumented.
Apple, for example, in 2013, had its Nike moment. In the ‘90s, Nike’s Asian suppliers were exposed for their horrendous working conditions, low wages, and use of forced child labor in factories that made Nike shoes and apparel.
Undoubtedly, Nike was not the only company that had labor issues with its suppliers. It just happened to be one of the biggest brands in the world, and Nike had to confront those labor issues publicly to preserve its public image and its athletic shoe and apparel empire.
Fast forward to 2010 when working conditions at Foxconn, Apple’s main iPhone manufacturer, were exposed. Although the iPhone was made at several different Foxconn factories around China, most of them were assembled at Foxconn’s 1.4 square-mile flagship plant, Longhua, just outside Shenzhen.
In 2010, Longhua assembly-line workers began killing themselves. Worker after worker threw themselves off the onsite dorm buildings, in tragic displays of desperation and protest of the work conditions inside. There were 18 reported suicide attempts that year alone and 14 confirmed deaths. Twenty more workers were talked down by Foxconn officials. Suicide notes and survivors told of immense stress, long workdays, unfair fines, lack of benefits, and harsh managers who were prone to humiliate workers for mistakes.
As an investor in public companies like Nike and Apple, it’s hard not to feel guilty about the negative social impact these companies’ products have on unseen workers.
Perhaps because of heightened exposure to the dark side of the shiny products we consume, there’s been a elevated social awareness of the effects our buying and investing decisions have on the rest of the world. Investors are starting to care where their money goes, which explains the rise of socially responsible investing and its cousin, cause capitalism.
Is it possible to be a socially responsible investor and still make money? The short answer is yes.
It is possible to align your investment portfolio with concern for people and the planet.
For those new to socially responsible investing, it may help to have an idea of what it means to invest in a socially responsible manner. Socially responsible investing is investing in companies that make socially responsible choices. In addition to being good stewards of the environment and their fellow man, these socially responsible businesses should treat their employees well, create healthy products and services, and have high ethical business standards.
HERE ARE SOME REASONS SOCIALLY RESPONSIBLE INVESTING MIGHT MAKE SENSE:
1. YOUR MONEY CHOICES SHOULD ALIGN WITH YOUR CORE VALUES.
If you don’t care about the environment or your fellow man, then socially responsible investing is probably not for you. However, if you do care about your fellow man, then why not align your investing with your core values? I assume the way you treat people and the way you conduct yourself at work aligns with your core values. Why not take your investing to the next logical step? By aligning it with your values?
2. WHY NOT PLACE YOUR MONEY WITH THE GOOD GUYS?
Why invest your money in companies with unethical business practices? To take it one step further, why be merely satisfied with not putting money with unethical companies? Why not put money with companies that are actively trying to make a difference?
Take, for instance, Toms, the shoe company that donates a pair of shoes to needy children for every pair sold. Toms was created by Blake Mycoskie, an entrepreneur from Texas who, on a trip to Argentina, noticed that the children he was playing soccer with were not wearing the types of shoes most of us are used to. They couldn’t afford them. Instead, they wore a simple, affordable slipper as their everyday shoe.
Inspired by the design and a desire to help children like the ones he was playing with, Mycoskie created a similar, simple design and launched the product in America. His goal was to create a for-profit business that did not rely on donations, yet helped the poor. The popularity of the shoes caught on quickly, as the “socially conscious” young adult proudly bought and wore Toms know their choice contributed to a suffering child’s wellbeing. Toms is credited with kickstarting the “cause capitalism” movement, with other companies following suit.
One such example inspired by Toms, childhood friends Ben Friedman and Brad Gillis opened Homegrown Sustainable Sandwich Shop in 2009 and have since built it to 11 locations in the Seattle metro area. The better-sandwich concept sources all organic produce, eggs, and milk, as well as all-natural meats and cheeses. Everything in the restaurant is recyclable and compostable – there are no trash cans – and the company even founded its own farm outside Seattle to further invest in its passion for sustainability.
3. LET YOUR MONEY DO THE TALKING FOR YOUR CAUSES.
By investing in companies that align with your values, you can make your voice heard without having to take to the street. By investing in multiple companies, you can clone your voice and be heard in more places and across more platforms and causes.
4. SOCIALLY RESPONSIBLE INVESTING CAN BE PROFITABLE.
Socially responsible investing and making money are no longer mutually exclusive. In fact, there is evidence that it can be profitable. A 2017 study found that organic dairy farms in Vermont posted better returns than their conventional counterparts by almost double for similar size conventional dairy farms. Parson, Bob (Dec. 31, 2017) “Study Compares Profits of Organic & Conventional Dairy Farms,” https://www.lancasterfarming.com.
5. DIVERSIFICATION.
Socially responsible investments can contribute to the diversification of your portfolio, adding companies with philosophies and strategies distinct from their corporate counterparts.
Increased social awareness and concern for your fellow man are bipartisan, nonsecular, and gender neutral. There is no reason social responsibility shouldn’t permeate our investing decisions as well. As socially responsible investing gains steam, let’s not forget the other part of the equation – the investing piece. Otherwise, you’re just donating to a worthy cause.
Investing implies putting money in an enterprise that is hopefully profitable and enduring. For profitable investments that are both enduring and also sheltered from typical Wall Street volatility, investors turn to alternative investments. And of all alternative investment classes, few are as profitable and enduring as commercial real estate investing.
WHY NOT MIX SOCIALLY RESPONSIBLE INVESTING WITH COMMERCIAL REAL ESTATE?
Discover more about our socially responsible commercial real estate funds and find out how you can make an impact on society with your investing.
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