ETHICAL CONSUMERISM AND INVESTMENT~SRI~

• By: Tunisia I.e. Al-salahuddin

• Business ethics and sustainability: org530-1

• Colorado state university- Global campus

• Instructor: JAMIE SMITH

INTRODUCTION

Within todays financial and economic market ‘Sustainable Responsible Investment’ means longevity

within business. Companies are looking for business to invest in that will produce capital and have a

product or service that will weather the storm and be around for decades. Investment means money and the

ability to produce money. Sustainvest Asset Management stated, “We actively try to  include enterprises

that have strong sustainability rankings with issues such as good employer-employee relations, strong

environmental practices, products that are safe and useful, and operations that respect human rights around

the world” (2015, Sustainvest). Each year the United States keeps record and presents a report on

sustainable investment businesses.

VALUE CREATION

Within SRI the value of creation is for companies to invest in companies that can create sustainable products and services. There is always a value point within investment that even wall street recognizes

and understands. Investors look for:

• Investment in companies and governments that the investor believes best hold to values of importance to the investor (Forbes, 2013).

• Shareholder advocacy is exactly what it would seem; socially responsible investors proactively influencing corporate decisions that could otherwise have a large detrimental impact on society (Forbes, 2013)

• Community investing has become the fastest growing segment within SRI, with some $61.4 billion in managed assets (Forbes, 2013).

SRI and Capital Investors are looking for companies that look right, produce capital, and present a portfolio of profitable gain i.e. bank stamen, investors shareholders report, years in business.

 THE SIGNIFICANCE OF SRI(WHAT’S YOUR STICK)

The significance of the SRI is mere sustainability within the USSIF report that also gets its data from the

Consumer Price Index (CPI) and other government reports to create their informative reports. Chamberlin a

writer of Forbes stated, “The SRI approach is to invest in stocks and bonds from those companies and

counties or municipalities that promote certain actions or eschew those, which participate in offending

actions. It is not unlike the carrot and the stick premise; you reward those that you agree with by investing

in their companies (the carrot) and avoid buying shares of those companies that offend your core values (the

stick)” (2014, Forbes). SRI creates a standard that companies must live up to along with proper investors,

but rather than have a competition they create standards that must be meet that attract investors.

3 WAYS TO INVEST IN SRI(COMPANIES, BONDS, STOCKS, MUTUAL FUNDS)

Sustainable Responsible Investing involves taking a deeper look into organizations overall agenda and view their Plans of Action.

• Program-Related Investing: What is the program involved in and does the program seem to fit the interest of the investors, and what they want to give capital to. The (stick) or the program of the company must grasp the interest of the investor. Companies, stocks, and bonds must have sustainability.

• Mission-Related Investing: Many companies like: Carnegie , Onassis Fund, Rockefeller Fund, and Capital World Bond Fund. Many of these funders look for investors, and also invest in smaller businesses, and organizations. When it comes to SRI funders and investors look for an excellent investment.

• Impact investing: Impact funding within SRI are companies or funds that make a community and global impact. These sort of impact investing must live up to the rules of SRI and be of a larger entity.

ENVIROMENT AND SOCIAL GOVERANCE (ESG)

INTEGRITY

Companies must up hold their integrity with funding and investing. They must also look for companies

that they want to invest in to do the same. The environment and social governance is usually within the

land laws and the policies and procedures that are instilled within the company. Organizations that are

sociably responsible along with environmentally responsible are more appealing to investors. The carbon

foot print that companies leave should be minimal this is necessary for the environment and investors must

take this into consideration.

KEY ESG ISSUES TO CONSIDER

• Environmental Carbon emissions, greenhouse gas emissions, disclosure/measurement and reporting Climate change; effect on Company/risk exposure/opportunities Ecosystem change Facilities citing environmental risks Hazardous waste disposal/cleanup License to operate in communities Pollution Renewable energy Resource depletion Toxic chemical use and disposal

• Social Animal welfare Child labor Community relations Discrimination Diversity (employee/Board diversity) Facilities, citing social risks Genetically modified organisms Living wage disputes Predatory lending Political contributions Political risk of involvement in troubled markets, countries Sexual harassment Shareowner advisory vote on executive compensation Slave labor

• Governance Cumulative voting Dual-class share structure Executive compensation (pay for performance, pay equity) Majority voting Poison pills Say on pay Separation of chairman/CEO position Shareowner rights Staggered Boards Takeover defenses/market for control

• (2008, CFA).

 INVESTING IN SOCIALLY RESPONSIBLE COMPANIES

When companies invest in SRI companies they must meet certain standards of quality and sustainability for the future.

• Product Quality- Products must meet a standard

• Service Quality- Services must be of excellent standards

• Sustainability- Companies and funders must be able to sustain their standards of production along with investors.

• Community Impact: All companies must make a vital impact within their community by giving back was they reach a peak of success. The majority of funders do community investment and funding as a way of giving back.

• Environmental Impact: Be cautions of your environment by going green and keeping pollutants down. These companies are very desirable to funders.

• Financial Impact: What is the financials looking like of the company and the funders and do they keep excellent records and books.

 ESG CRITERIA TO BE USED

• Awareness: Investors are more likely to use the awareness criteria when looking for companies to invest in. Investors that want to invest in companies must make sure that they check the mission of the company along with all agendas and plans of the companies to ensure they meet SRI rules and regulations of that states company.

• Environment: Investors are looking for environment friendly investors that use the go green concept and mean what they say.

• Social: Using a “BEE” Social within community and development is something else investors look for. Giving back to your community.

• “Community Investing directs capital from investors and lenders to communities that are underserved by traditional financial services institutions. Community investing provides access to credit, equity, capital, and basic banking products that these communities would otherwise lack” (2015, SAM).

 THE LINKS BETWEEN ETHICAL CONSUMPTION AND ETHICAL INVESTING

ETHICAL CONSUMPTION• Ethical consumption is something that

consumers regulate. Consumers usually create the standards for what they want at the top and now the bottom of the pyramid. The products, by products, and services rendered by the manufactures and even the investors are the standards usually set by those who buy into the product and services.

ETHICAL INVESTING• Ethical Investing: Meaning do not invest in

companies that are pyramid schemes that have no moral standing. These companies are usually fake put together companies on paper that usually do not exist at all (no product and no service). Unethical investing can also be investing in companies that do unethical things or have unethical practices under law and governance.

SRI-FINANCIAL PERSPECTIVE

• The financial perspective ends with the consumer the

customer and then goes back to the perspective. In

order to gain capital, get financial lenders to invest in

them. The perspective also includes companies to be

social responsible investors. The perspective should

stay encompassed within all phases of the formation of

the company agenda and the investors governance.

CONCLUSION

The ESG and SRI of all companies in order for investors to fund them or ever consider

funding them should be within the over all mission and plan of the organization. Investors

create the policies and procedures that their organization should follow along with

companies they put capital into. Environment, Social, and Community are always major

factors that need to be taken into consideration when funding any company.

QUESTIONS

REFERENCES

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FACTORS AT LISTED COMPANIES. (N.D.). RETRIEVED MARCH 5, 2015, FROM HTTP://WWW.CFAPUBS.ORG/DOI/PDF/10.2469/CCB.V2008.N2.1

THE IMPACT OF SUSTAINABLE AND RESPONSIBLE INVESTING. RETRIEVED MARCH 5, 2015, FROM HTTP://WWW.USSIF.ORG/FILES/PUBLICATIONS/USSIF_IMPACTOFSRI_AUG2013_FINAL.PDF

THE ROCKEFELLER FOUNDATION. RETRIEVED MARCH 5, 2015, FROM HTTP://WWW.ROCKEFELLERFOUNDATION.ORG/

SOCIALLY RESPONSIBLE INVESTING: WHAT YOU NEED TO KNOW. (N.D.). RETRIEVED MARCH 5, 2015, FROM HTTP://WWW.FORBES.COM/SITES/FEEONLYPLANNER/2013/04/24/SOCIALLY-RESPONSIBLE-INVESTING-WHAT-YOU-NEED-TO-KNOW/

(2014, JANUARY 1). RETRIEVED MARCH 5, 2015, FROM HTTP://WWW.USSIF.ORG/FILES/PUBLICATIONS/SIF_TRENDS_14.F.ES.PDF