Along with the rise in veganism, many investors are asking, “How can I make sure my investments match up to the cruelty-free ethical stance I’ve taken regarding animals and the planet”?
Just as being vegan means avoiding harming or exploiting animals, ethical investing – also known as socially responsible investing – involves not giving your money to fund anything that would hurt our planet.
There are two approaches here: you can avoid funding activities that negatively impact the planet, or back companies that are aiming to do good in the world, such as those promoting animal welfare. The trick is getting the right balance between the two. Ensuring you don’t invest in “sin stocks”, such as weapons manufacturers and tobacco producers – you could add meat farmers to this list, too. This process is called negative screening. The challenge is that while you might successfully avoid companies whose core services and products are considered harmful, you might still be left with those whose practices are undesirable, be it worker exploitation or high CO2 emissions, to name a few.
If you exclude these businesses too, you may find yourself with a very limited number of vegan companies that you want to invest in. This makes it difficult to spread your money across enough investments to smooth out your returns. Investing in fewer things means your money will be more affected by swings in their value. We explain this idea of diversification and the risk of putting all your eggs in one basket in more detail here.
However, just as veganism is on the rise, ethical investing is also increasingly in demand. During 2020, a massive $13.7bn flowed into responsible investment funds from private investors, a rise from $5.6bn in 2019, according to the Investment Association.
The good news is that because of this demand, as well as pressure from the public and regulators, more companies are starting to comply with ethical standards. Thus, you will gradually have a bigger pool of shares to choose from. Another approach is to invest in companies that aren’t just behaving ethically, but their sole business model is to make a positive impact on our planet.
How Should I Invest?
You also need to think about what “ethical” investing means to you. Do you want to focus on veganism, such as with companies producing meat alternatives or plant-based food? Or, are issues like ethical work practices and commitments to renewable energy also important? Therefore, investing ethically will depend on how much you want to avoid companies that go against your beliefs.
To participate in the ever growing and rapidly evolving vegan investing space, one should consider a broader and more diversified approach to alleviate some of the potential risk, rather than simply trying to choose an individual stock or two. At Demand Wealth, we have developed the ‘Demand Cruelty Free’ portfolio for this very purpose. It contains cruelty free screened and globally diversified companies that align with your values, risk profile and financial needs.
Finding cruelty free investments can be an arduous task. However, at Demand Wealth, it’s one of our specialties! Click here to open an account or learn more by scheduling a zoom with one our vegan advisors today!
This report is a publication of Demand Wealth. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change.