It’s nice to know that your money can do good things. Whether you donate to a good cause, buy local, or shop for environmentally sustainable products, there are many ways that your hard-earned cash can support the things you care about and make the places you live better. But what about your investments?
If you’ve asked yourself this question, you’re not alone. 92 percent of Canadians feel that it's important to choose investments that are consistent with their values. And there’s good news; there are an increasing number of ethical investment options available through credit unions. But what are ethical investments anyway? And, though there are socially responsible choices available, there are also some common misconceptions around what it means to invest ethically. We’re here to explain the basics and debunk some of the myths to help you talk with your credit union financial expert to see if ethical investments can help improve your bottom line.
So what is ethical investing?
Simply put, ethical investments put money to work in companies with business practices in place to do good with the goal of offering traditional returns to investors. While the definition of “doing good” varies, in order to be part of a socially responsible investment, a company usually needs to be screened based on environmental, social and governance (ESG) criteria. Some ethical investments also avoid certain industries all together – such as tobacco, illegal arms, or energy sectors that have questionable environmental track records.
Busting the myths
MYTH: Ethical investments aren’t diverse
FACT: While it’s true that socially responsible investments may avoid certain industries and that they do look carefully at the companies they choose to invest in; this doesn’t mean that they’re not diverse. In reality, ethical investments often invest in major brands across a wide variety of industries.
MYTH: Ethical investments don’t perform as well as more “traditional” investments
FACT: Ethical investments can perform just as well – if not better – than traditional investment choices in their class. Just because a company is socially responsible doesn’t mean it isn’t profitable.
MYTH: Ethical investments are unpredictable
FACT: Just like traditional investments, there are a wide range of socially responsible investment options available that range from low to high risk – there are even socially responsible guaranteed investment products available. Your local credit union can take you through the many options out there.
There are lots of great ways you can invest ethically. Contact your local credit union to learn more about ethical investments and how they can help you save for the future and feel good that your money is doing a little bit more.
 NEI Investments. “Investors and Responsible Investing: What Advisors Need to Know”. June 28, 2016.