Hydrogen cars will become viable investments. Some ethical investing is elitist. Parts of the corporate-reform movement are dead. Those are a few of the strong positions taken by the Monitor's second annual ethical-investing panel. The panel, looking ahead to 2005, was cautious about the overall market. But some areas, such as environmentally friendly stocks, hold promise.
Ethical investing is not just about profit, it's about changing the world. One panelist introduced a new avenue for doing that: venture philanthropy, which brings business discipline to the nonprofit world. The panelists - (were) Anita Green, vice president of social research at Pax World Funds; Charles Harper, executive director of the John Templeton Foundation, and Jack Robinson, president of Winslow Management - talked with a Monitor editor and writer Jan. 18. Here's some of what they shared:
What's the 2005 outlook for ethical investors?
Jack Robinson: I think there are two broad categories: One is the overall investment climate, which is going to be relatively difficult in the face of rising interest rates, rising inflation, and other issues we are dealing with, such as terrorism and higher oil prices.
The tech sector is especially vulnerable to this.
But it may not be that they are actually engaged in weapons; it may be simply that the Department of Defense is buying the same technology that you or I can buy off the shelf.
In the area of environment, this is a good news/bad news [scenario] for investors.
The insurance companies are also issuing some statements on this, and investors are engaging companies in dialogue around this issue.
The bad news is that under this administration, what we've seen in the first four years is a rollback on environmental regulation.
Charles Harper: It's part of a movement to encourage people in philanthropy to think like businesspeople about what is innovation, what is efficiency, what is yield on philanthropic investment ...
One thing that's puzzling about the socially responsible investment community is that there's essentially nothing done in terms of hedging portfolios against decline.
One of our clients, four or five years ago, [asked]: "Why don't you go long on greens [environmentally friendly companies] and short the dirties [egregious polluters]?"
Microfinance is the tip of the iceberg for the development of business among the poor in places like India, huge markets in China - we're talking a billion people - and as those people emerge from poverty into the middle class, they will be big consumers, they will want to buy a lot of stuff.
Harper: There's an illusion, a scientific illusion here, that these cars are cleaner.
Fuel-cell economies are [mostly] based on breaking down hydrocarbons, so the source of the power is very similar to burning hydrocarbons.
But I think there are other ways to generate power, such as wind, solar, and biomass.
And if, indeed, you are in favor of nuclear, that could be used to do the same thing.
The difficulty is with the waste that is produced and the fact that we have no effective long-term way to deal with it except to bury it underground.
The technological challenge of flying me from Philadelphia to Boston is much more complicated and serious than the technological problem of storing nuclear waste.
Gambling and Hollywood [for example] have disproportionate impacts on poor people - people at the bottom - particularly Hollywood.
It gives people a vision of life, a way of thinking, a way of looking at the world, that's antithetical to their success in many ways.
However you look at it - whether it's locking them into sexual license, whether it's locking them into a vision of cynicism, or whether it's locking them into a materialism where they think that's the way to be human - the way to succeed is to have all this expensive stuff that you have to buy, some sort of ticket to the rat race.
There's a fascinating study that was done on states that had enacted a lottery, and the long-term financial, or economic, impacts on those states.
It's the poor people, it's the ones who can't afford it, who are taking the grocery money and using that to play the lottery.
Robinson: There are broad categories such as healthy living, which would include natural and organic foods, the largest of which is Whole Foods.
Green: Socially responsible investors in 2005 will see increased market share.
Even during the first three years of this decade, when the market was doing so terribly, the socially responsible funds saw new money coming in, and they saw that the investors that they already had stayed with them.
Summarized by Copernic Summarizer