Ethical Investments for the No-Longer-Broke

Can you invest your money and keep your soul?

Photo credit: Andreas Poike, CC BY 2.0.

In 2012, I picked my first mutual fund out of a hat. I had a little over a grand saved up in my retirement account, and was told it was time to put it somewhere. I looked at a few line graphs and chose the one with the fewest crazy dips.

In early 2016, I decided to re-think my investment strategy. My tax-free savings account (the Canadian answer to a Roth IRA) had $5,000 in it, a tax-return windfall I determined to turn into a Fuck Off Fund.

A Story of a Fuck Off Fund

But the interest rate is a measly 0.5 percent, and I wanted to do better.

Being entirely new to all of this “having money” stuff, I wasn’t entirely sure where to start.

What We Worry About When We’re No Longer Broke

So far, I’ve:

  • Charted the next 20 years of my financial life (mainly dominated by student loan repayments, aging-parent support, and saving for my own retirement)
  • Thought about buying property (probably not)
  • Pledged to buy myself life insurance
  • Thrown some money at local charities and crowdfunders
  • Considered switching over to a credit union, though I’m not quite ready to take the plunge yet

But the mutual-fund situation has loomed large for me. I started to wonder whether it was possible to be hands-off about investing, but still put my money somewhere ethically sound (i.e. not into oil).

Turns out, yes! Or … maybe!

I learned, from a flatscreen in my local branch, that my bank offers what they’re calling “the first impact investing mutual fund” in Canada. They offer two: a fund called “Women in Leadership” that only buys into “North American companies that have a female CEO or a board of directors with at least 25 per cent female representation,” and one that excludes corporations that “primarily” make their money off fossil fuel exploitation.

Neither of these sound outrageously moral to me. Why only 25 percent female representation? Is 50 percent really too much to ask? What about companies that are innovating in renewable energy, or have pledged to make their businesses rely solely on green sources?

It turns out “impact investing” is less like mutual funds and more intended to complement traditional philanthropy: why just endow an organization when you can make money off your support, too? Unfortunately, that’s where these fund portfolios fall short: it’s hard to be both bleeding-heart and business-savvy. In the US, many impact investments are restricted by their volatility — it’s too risky to put money in the hands of non-profits, and financial advisors are often legally obligated to make you money.

In many ways, impact investing really isn’t revolutionary. There’s no regulatory body in the US or worldwide that assesses whether a mutual fund is doing what it promises; the EU designates its funds as impactful if just 70 percent of the investments are in social corporations.

It also looks like companies can get a foot in the door by promising good-sounding things, like creating jobs in areas with high unemployment — without paying a living wage for those jobs.

Through the course of my hunt, I’ve become angered by the descriptions of funds that support endeavors in less regulated countries. A lot of funds will support businesses that turn a profit where something ought to be free, like a fund that purifies drinking water and then sells it to villagers “at reasonable rates.” Businesses like these capitalize on a lack of infrastructure and social spending, which is not where I want my money to go.

Despite my bank’s claim to offer the first impact investing mutual fund, there are several portfolios marketing themselves as “impact investing” in Canada. There’s a “Catalyst” fund by a startup incubator, that invests in startups with social good; “Renewal” funds, which seems to be focused on mitigating the Anthropocene; “Solar Bonds,” which promise 6 percent annual interest for long-term bond-buyers; and a rival bank’s “Generator,” which lets you choose investments in education, environment, jobs, and water infrastructure.

Most of these sound perfectly fine from a distance (especially those Solar Bonds, which I might be able to buy through my retirement savings plan). But, while shopping around, I’ve brainstormed some dream portfolios I’d rather see:

  • An Awesome Employer Fund: 100 percent comprising companies that don’t run unpaid internships, that pay a living wage, and that have unionized employees in safe working conditions. And with a healthy gender and race split in their staff, especially in their executive department. And gender-neutral bathrooms!
  • A WOC in Tech Fund: startups with zero white men involved. No, not even Chris-Hemsworth-ian receptionists.
  • A Crunchy Granola Fund: companies selling fair-trade, eco-friendly, renewable materials produced in green, non-polluting work environments. Or those that can prove they offset their carbon emissions through environmental philanthropy.
  • A Local-Only Fund: my Canadian bank’s women-in-leadership fund actually invests 90 percent of its holdings in American businesses. I’d love to see a fund that will pledge all of its money to nearby job markets.
  • A Social Justice Media Fund: if only Twitter et al could just try to provide user support. If a site demonstrated commitment to protections from harassment, and features that complement the obvious benefits of online organizing, I’d invest in them, no matter how many ads they forced down people’s throats.
  • A Debt-Forgiveness Fund: perhaps we could buy some debt (John Oliver bought $15 million for $60,000) and forgive all but our initial investment, plus 5 percent, working out payment plans with a few people? Is that ethical? At that rate, my own $30,000 student debt would cost me less than $150 — a deal I’d happily take (though I know many couldn’t).

As for me, I’m booking a bank appointment to talk about sliding my RRSP into Solar Bonds. For my Fuck Off Fund, I’m probably stuck with that measly 25 percent female executive package for now. Change starts small, after all.

Allana Mayer is a librarian, archivist, and freelancer writer in Toronto. Follow her on Twitter at @allanaaaaaaa.

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