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MARCH 28TH 2011 

What does your money do when it leaves home?

Yup, this is about investing. Don’t let your eyes glaze over. Even if you don’t consider yourself an “investor,” you likely are. While few of us own equities directly, most have pension plans or make active choices about RSP contributions.

Even the 18-34-year-old demographic who is just starting out (in work or family) is keen to invest in their future, says a report from RBC. A full 40% have RSPs, and a third of those are maxing out their annual contributions. That’s a lot of money looking for an investment home.

So the stats say if you’re reading this, you likely influence or control your investments. Here’s our question: should you apply an ethical filter to where it goes?

The standard wisdom, and we call it “wisdom” for a reason, is that you really should be concerned about one thing when you invest: RETURNS. Umm, duh! Of course that’s the point.

If you were only concerned about results, logic holds that you might be operating in the legal shadows, where your returns could be greater because the legal risks make it harder for the enterprises you’re investing in to raise capital. But, not you. You’re not interested in anything sketchy; it has to be legal. So your filter is more layered — the best results, but only if the companies are law-abiding. Fair enough.

BP was behaving legally in the Gulf of Mexico, even if history shows their oversight was loose, but you wouldn’t have known that as an investor. You can also invest in companies selling tobacco. Clear-cutting old-growth forests. Mining the tar sands. Making armaments. All are legal behaviours, by companies employing good people trying to support their families.

And you can invest in the banks. That sounds solid, and legal. Oh, and don’t forget they’ll use your money to invest in the other legal businesses we just described.

At this point, maybe you’re saying, “Whoa, hang on. I don’t want to invest in companies that are hurting the planet, or hurting my fellow citizens.” While we applaud that thinking, you better stick your money in your mattress if you’re using it as your investment filter. Anyone involved with investing will tell you that the tighter the ethical filter, the more your results will suffer. Ouch.

That’s why we’re suggesting you reframe the issue, from ethical investing to sustainable investing. When we talk about sustainability, we’re not talking about the environment we’re using the word in its broadest sense.

For starters, look for companies that practice stakeholder thinking, balancing returns to each group of stakeholders so that none succeeds wholly at the expense of another. This checklist will help you make that evaluation. Does the company:

• Generate benefit beyond its profit?

• Treat the environment as a resource to be stewarded?

• Provide employees a good place to work?

• Acknowledge the importance of symbiotic success with suppliers, while generating acceptable returns for their investors?

Ultimately, it’s up to each of us to figure out where we’re comfortable investing, or having our money invested. We don’t tell anybody what to do here at Citizen Capitalism, but what we advocate for is more deliberate choices that allow us to improve the world one act — in this case, investment — at a time.



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