If you don't like the gun culture so much, why do you invest in it?

There has been enough discussion of recent events surrounding guns and weapons in other countries, that I am sure that I don't need to go into it here. Suffice to say that 'gun control' (or the lack thereof), continues to be an issue.

It now appears more likely than not, that in America at least, there will be no change to their gun laws, at least in the short term.

While the stats in the attached article are a few months old, they highlight the ease with which guns are available in America, and the way that they have been 'normalised' in society.

But in Australia, we have tighter gun laws. Phew. We don't own nearly as many guns per capita as other countries. But, whether you know it or not, you own the companies that make them.

A very quick skim through this Guardian article shows the largest manufacturers of arms in the world. There are many companies that have names that makes it impossible to know what they do (no doubt a coincidence), but there is one or two names in the top 20 that people will have heard of. General Electric, or GE is one of them. Now, GE is not the worlds biggest maker of arms (this report says 18th). And they don't even have a large percentage of their business revenue being generated by arms sales (a measly 3% of revenue according to this report). But, on the other hand, in 2010, they sold $4.3B US in arms. Further, fund managers are pretty tight with their share holdings, so I would imagine it is fair to say, without looking beyond the first page of the first fund manager I looked up, that this is not the only investment in weapons that js been made on behalf of Australian superannuation investors.

What's that got to do with you. A quick scan of one super provider QSuper shows that GE makes up a part of their international share portfolio. So investors utilising the services of Qsuper (public servants at the least, and many others in Queensland), own a part of the company.   For some, this would not be a problem, but for others, it may well be.

And that is where the concept of responsible investing plays a part in the financial planning process for individuals. You may have the ability to screen out the companies and sectors from your portfolio that operate in areas that you feel uncomfortable with, or even support those companies that produce products or services that you can get behind.

The above example with GE and QSuper is just one small look at the type of companies and products that people may unwittingly own. There is something you can do, and it starts with asking,

"What's my Money up to?"

Feel free to leave a comment and let me know what you think.

Find out more at www.sociallyresponsibleinvestment.com.au

 

Why having values may lead to better investment decisions

On a personal level, my wife and I started thinking about ethical and responsible investment shortly after our first child was born. Being responsible for someone other than ourselves really meant a review of our priorities, and the importance of a 'legacy', for want of a better term.

You got that right

On a professional level, it took a little longer to get started. As I have said in an earlier blog posting, I had a boss who thought that 'ethical investment' was for hippies (his words), and was not something that he wanted discussed again. So I let it 'sit', but still looked for opportunities to introduce it into the practise, if an opportunity arose.

This 'opportunity' really hit home one day when I was speaking to a surgeon who was distressed to find that his investment portfolio continued an exposure to Philip Morris. He said he spent a good portion of his working week operating on oesophagus's (oesophagi?!) and lungs burdened with cancer, and could not and would not make money from a company selling tobacco products.

It was at this point when I realised; this surgeon is no hippy.

Not a hippy
 

Investments play a part in your wealth creation strategy.  Taking your personally held values, and using them to inform your investment decisions can lead to more active ownership and engagement in the process of what it is your trying to achieve.

So you think you have no investments? Almost everyone of working age in Australia has SOME superannuation. If you want to meet your goals, then you'll also need to put SOME money SOME where at SOME time, to help you to achieve this. It is possible to take the things that are important to you, and incorporate them into the investment decisions that you are making.

You can be comfortable that your investment decisions meet your personally held values, and also assist you to meet your financial goals.

Now people, we have analytics. I can see that there are page views. I'd love it, if you could leave a comment or two, to get a discussion happening, or just to hear your thoughts.  

Find a way or make one

I have been a financial planner now for about 14 years. I have been a business owner and manager for about 6 1/2 years.

I doubt that I ever thought that I would own a business when I started in planning. It really came to a head about 7 years ago, and for a number of reasons.

I was unhappy with the direction that the company I worked for was taking. I felt uncomfortable, to say the least, with the sales at all costs ethic, and what I guess I would consider a product first approach. I felt, and still do, that client needs come (waaay) before the 'product'.

Secondly, I was concerned about the compliance record. I personally did OK, but the practice had...issues. Compliance can be onerous at times, but it is in general for consumer protection, and important.

Finally, I had started to look into ethical and responsible investment. More to the point, it had started to make real sense personally, and from a business sense. Even more to the point, I was beginning to feel uncomfortable about the 'disconnect' between how I felt personally on issues, and what I was doing 'at work'. With regard to that, I don't feel that there is ANYTHING unethical or irresponsible with financial planning or investing per se (fancy, huh). But there can be unethical practices that underline this. Moreso, it is a problem if you (the invetor), aren't aware of the practices, and they are something that in general you wouldn't feel comfortable with (or worse, would actively avoid).

(Oh, OK, so you are aren't an investor? Just about any person under the age of 50 who has had a job has super. And it just might curl your lashes to see where they invest YOUR money).

It came to a head when I mentioned the idea of incorporating thses ideas into the practice. It did not go well. Hippy sh*t may have been mentioned, (as per a Brisbane Times article from a couple of years ago).

So putting the three together, I decided that the practice that I worked at was no longer for me. I couldn't see the point in working elsewhere, thinking that the lack of control would be the same everywhere.

In essence, I felt that the way forward was to go and do something else completely, or go and set out our 'own shingle'. That new business would have to have the clients interests at heart, ensure appropriate client protections were in place, and that we respected, and actively canvassed client values.

A few rushed months of rudimentary business planning later, and Viridian Wealth Management Pty Ltd was born.

Feel free to comment. I would love to hear what you think.

What else gets you riled up?

The last few days have seen some really powerful examples of, for want of a better term, people power. There have been some really evocative issues and people have put themselves out there to stand up for things they believe in.

First, there was 'slutwalk'. Then live exports of cattle became an issue. Then over the last day or so, there has been the adshel controversy. While there has been some debate as to the language used, and redeemability of the word slut, what can't be debated, is that these issues have struck a chord, and that people have chosen to act.

These three highlighted issues are important. Regardless of the wording, there is no excuse for rape, and no excuse to blame a victim for being raped. The treatment of the animals in the overseas abattoirs was appalling to watch. Finally, in 2011, are people still scared of seeing two men hug?

But thinking of the positive messages makes me question other things. I don't wish to take away from these issues, but it gets me to thinking about what else riles people up?

I noted the other day that the Australian Government (with your money) invests in companies that manufacture nuclear weapons for Indian submarines via the Future Fund. Is that enough to get you riled up? Or how about your super fund investing (again, with your money) in companies that make weapons, use child labour or damage the environment?  Is any of that enough to get you riled up?

Most people I know would not support weapons manufacture, child labour or degradation to the environment. Except, that they do passively via their superannuation investment. Most people I know would not eat chocolate produced by slave labour in West Africa , yet they own the companies that produce it.

Moreso, the Greens are now getting 10% and upwards in votes at elections, yet only 2.5% of money invested in Australia is done via ethical and responsible investment. Why the gap?

If these things rile you up, then by all means march in the street. Send an email to your MP. But don't support  these things passively. It is possible to support want you want to support, and avoid what you don't like without it affecting your end returns. You can continue your activism by withdrawing financial support for companies that conduct themselves in ways you don't agree with.

To try and find out a little more, I will be asking this over on the Facebook page tomorrow. I would really love your feedback, so please, comment below, or head over to the Facebook page.

PS. News has come through that one of the bus shelter ads has been defaced. Really?


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Australia Invests in Nuclear Weapons

The Future Fund, was set up by the Australian Government from the sale of their remaining stake in  Telstra in 2006, The Fund was intended to help the government pay it's future superannuation obligations. Recently released records (obtained under FOI laws) show that the Fund has invested over $130 million in companies that design, produce and maintain nuclear weapons. This includes investment in companies that are building nuclear armed submarines for India, a non signatory to the Nuclear Non Proliferation Treaty.

The good news is that recently the Future Fund sold out of their holdings of companies manufacturing cluster bombs.

The Future Fund was set up using the proceeds from the sale of the Governement's holding of Telstra. It is our money. So where else is 'our money' (read YOUR money) invested. A two minute search shows that investors in one of the largest and most well known super funds in Queensland invests in uranium mining. The same fund has investments in Exxon Mobil and BP.

As ever, if you are comfortable with these types of investments, then it is business as usual. However, if you are not, and do not wish to support them, or wish to actively activate against them, you can.

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Demand for Responsible Investment is increasing

The Global Financial Crisis has made more people aware of the importance of considering good corporate ethics, governance and environmental issues when examining the future worth of any investment.

Once upon a time responsible investment (RI) was considered a niche market. Today responsible investors come from all walks of life and the issues that motivate them are universal.

• They may have an interest in social issues, be a member of community, environmental, political or human rights groups.
• They could have a science background and be passionate about new energy technologies as a way of solving the problem of climate change.
• They may belong to a faith based or other spiritual organisation, or they might want to be close to nature and might just want to ensure its' preservation.

RI appeals to people from all age groups and all social backgrounds.

The most common reasons why people decide to become responsible investors are:

• To generate competitive returns whilst making a difference to the environment or society.
  
• To ensure your money is directed towards companies making a positive difference to the environment and the impact of climate change whilst avoiding those that cause harm.
  
• As a way to influence corporate behaviour and push for greater accountability on issues like employment and trade conditions, environmental sustainability and good corporate governance.
  
• To take your social or consumer activism to the next level.
  

As far as the GFC is concerned, adopting an RI strategy is an excellent way to facilitate improvements in corporate responsibility.

In summary then, the way you invest inside and outside of super can help you make competitive returns, as well as having a positive impact on the environment, socisal issues, and corporate behaviour.

That only leaves one question; What is YOUR money up to?

What's your money up to?

We all want our super and savings to be safe and earn a solid rate of return. But do you care about other things too? You might be worried about climate change, the provision of affordable health care services or managing our resources to meet our current needs and those of our aging and growing population.

Responsible investment (or ethical, sustainable, ESG or green investing) gives you a way to generate returns over the long term, using a sustainable investment strategy that reflects your personally held values. Investing responsibly is also a way to support and benefit from environmentally friendly technologies, sustainable agriculture, recycling and waste management and green infrastructure.

Finally, recent reports have shown that responsible investment can even outperform more 'mainstream' investments. So responsible investment can be a way to generate competitive returns and find solutions to many of the problems of the 21st century.

To get started, you just need to ask yourself; What's YOUR money up to?