Often investing focuses mainly on profits and returns. However, return doesn’t just have to be about the amount of money you earn. It can be about making a difference in the world you live in. Studies show helping others, and charitable giving are two keys to lasting happiness and personal growth.
Some of us choose to make a difference and help others in the way we invest. This type of investment strategy is known as socially responsible investing. Socially responsible investing supports companies and organizations with strong environmental, social, and governance (ESG) practices.
It could mean that you invest in an energy fund that solely invests in companies using renewable resources or a biotechnology company entirely dedicated to curing a rare form of cancer. Being a socially responsible investor also means that you avoid investing in certain types of companies such as “The Big Three.”
What are the “The Big Three” Investment choices most avoid in SRI?
“The Big Three,” tobacco, oil, and guns, are typically considered the most controversial investment choices. Many state-run funds have or are in the process of divesting funds out of controversial industries. In California, the public employees’ retirement system divested from tobacco and cost the state an estimated $2-3 billion in lost potential investment revenue.
The mayor of New York City proposed to divest nearly $5 billion out of fossil fuel stocks, which is expected to cost New York City $1.5 billion. While divesting from certain stocks may be the morally right thing to do, it can jeopardize retirees’ money across the country.
Is “The Big Three” becoming & the rules for a company to be the “The Big Four”?
We are often asked if marijuana will become number four. Even though legal for recreation or medical purposes in some states, the Drug Enforcement Administration (DEA) considers cannabis a Schedule I drug. According to the DEA, there is no currently accepted medical benefits and a high potential for abuse.
Given this definition added to the SP 500, it is unlikely that a “pot stock” will be added anytime soon. Despite their lack of inclusion on major stock indexes, cannabis stocks still garner a lot of attention. When considering the morality of investing in cannabis, there is no clear answer.
It’s often said that cannabis is not as deadly as tobacco. It’s also safe to say that legalizing marijuana won’t create world peace. Whether or not you consider cannabis a socially responsible investment boils down to personal beliefs, convictions, and morals.
Whether your current portfolio strategy includes investing in companies with strong environmental, social, and governmental practices, or your goal is to make an impact in the future, the Means Team is here to guide you every step of the way, helping you to choose investments that support the change you want to see in the world.