For those with a social conscience and cash to spare, socially responsible investing is all the rage. The environmentally aware can avoid coal, humanitarians favor fair trade, and wowsers can ensure their coffers aren’t swollen by the proceeds of porn, cigarettes, alcohol, gambling and fun.
Financial analysts might debate the relative returns of these hand-picked portfolios, but the real question is whether the rise of socially responsible investing can make a substantial impact on the companies that these investors passionately support or deplore.
Can boycotting shares in a logging company save an orangutan? Could avoiding coal stocks improve air quality? Will the Future Fund’s purge of tobacco stocks cut smoking rates? Can shareholder activism change dodgy business practices?
Stephen Shore is the deputy editor of Capital, The Australian Financial Review’s magazine and website dedicated to capital markets and investment banking. Stephen also regularly reports for the newspaper, covering topics such as high frequency trading. He was formerly co-editor of the AFR’s Street Talk column.
Philip Vernon is the Managing Director of Australian Ethical Investments. Phil has 25 years experience in financial services covering funds management, superannuation and capital markets. He was a member of the Executive Committee of Perpetual Limited heading up its Corporate Trust division and has extensive experience in corporate governance and industry regulation. Phil has a long involvement in sustainability and corporate social responsibility and is a director of Planet Ark, a not for profit environmental organisation.