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Can You Be an Ethical Investor? - YouTube
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i'm gonna be honest it's hard to open an
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internet browser and not feel like a
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helpless passenger on the hot mess
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express
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even before kovid issues like climate
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change
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human rights violations systemic racism
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and corporate abuse have left
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many of us feeling cynical and helpless
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and if you've taken a look at your
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investment portfolio
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you almost can't help but ask are my
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investments making these problems
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even worse it's a fair question on one
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hand
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the whole purpose of investing is to
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grow your money
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on the other the cost of those profits
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might be quite steep
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on both society and the planet so
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do you continue to take part in this
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system no matter the cost
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or is there a better way can you really
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make an impact with the way you invest
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[Music]
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thank you to morningbrew for supporting
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pbs from wall street to silicon valley
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and
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everywhere in between morning brew is a
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news source aggregated and curated
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from major news outlets so that you can
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get up to speed in a few minutes
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morning brew news covers topics like
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business finance and tech
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on morning brew i learned that digital
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black friday sales increased over
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20 percent this year to 9 billion
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and while it was no surprise that far
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fewer people are shopping at brick and
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mortar stores this year
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i learned that u.s store visits dropped
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over 50 percent from last year
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reading the morning brew newsletter i
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also learned about major mergers and
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acquisitions over the past year
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including market indices across the
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globe buying large
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data providers which underscores the
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rising prominence
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of data analytics across the world of
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finance
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i could sign up in a few seconds and i
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can read the daily newsletter in a few
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minutes
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for more information you can visit the
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link in the description to sign up for
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morning brew
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the bedrock of capitalism is the
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motivation to make
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a profit but there's always been some
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fringe group that felt there was more to
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consider
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all the way back to the late 1700s
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colonial america
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subsets of protestantism like the
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methodists and quakers
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let their moral and religious beliefs
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guide their investments
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to them industries around slavery
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alcohol and tobacco were immoral
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and they actively avoided investing any
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money in them
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and there you have it the concept of
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impact investing was born in america
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for centuries socially responsible
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investments or
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sris as they came to be called were
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synonymous with religious and moral
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values
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but in the 21st century the concept of
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impact investing began to
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fundamentally change with a new acronym
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esg
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first coined in 2004 by a u.n commission
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report titled who cares wins
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esg stands for environmental social and
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governance criteria
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that can help an investor assess the
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financial strength of an investment in
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the modern world
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that is to say more than just being
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wrong or right
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in a moral sense choosing companies that
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score highly on esg
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criteria results in a better investment
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for society the planet and your
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pocketbook
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over the past decade major ratings
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agencies began
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assigning numerical esg scores to etfs
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mutual funds
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even individual companies and while
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there's currently no
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single uniform rating standard by
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looking at the scores of several
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agencies and
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understanding how they calculate their
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scores you can gauge the relative impact
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of your investment so what might have a
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positive or negative impact on an esg
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score well the e focuses on factors
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like natural resource use pollution and
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sustainability initiatives
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companies that make positive steps to
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reduce their carbon footprint or
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utilize greater renewable energy
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resources will benefit from a higher
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e-score
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the social aspect refers to corporate
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behaviors that impact the public
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for instance in 2019 when walmart
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decided to stop
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selling certain types of ammunition in
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response to recent gun violence
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surveys found that people were more
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likely to shop there
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shortly after the decision not to
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mention giving a small boost
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to their escort and governance is a
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measure of the ethics
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and transparency of a company's leaders
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the
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doctoring of volkswagen's emissions
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tests and wells fargo's fraudulent
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account openings
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damaged the public trust and damaged
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their g-scores
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how much of an impact can this approach
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actually make
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take an example from the 1960s and 70s
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american university students and
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teachers had begun
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protesting apartheid in south africa but
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momentum
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really began to build when they
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pressured their schools to completely
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stop investing their endowments in south
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africa
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this is known as protest divestment and
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was a radical move when you consider
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that between
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a third and a half of the s p 500 did
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business in south africa
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this culminated in 1986 when congress
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banned
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any new u.s investment in the country
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resulting in a
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billion dollar loss in capital for south
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africa the economic fallout
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coupled with the decades of political
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resistance finally led to the end of
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apartheid in the early 90s
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today more and more companies are
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beginning to take the esg movement
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seriously one study found that a third
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of american companies
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say esg ratings are shaping their
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overall business strategy
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larry fink the ceo of the world's
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largest investment firm blackrock
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wrote in his annual letter that every
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company must not
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only deliver financial performance but
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also
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show how it makes a positive
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contribution to society
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and at the world economic forum in davos
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this year major financial institutions
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made a big
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show of removing carbon heavy
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investments from their portfolios
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but let's talk hard numbers here does
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investing with your conscience
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hurt your returns not necessarily
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a recent morgan stanley study compared
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returns for over 10
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000 funds between 2004 and 2018.
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the study found there was no financial
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trade-off at all between
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impact-focused funds and their
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traditional counterparts
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furthermore these funds seem to offer
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even lower risk
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especially during turbulent times like
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this past year
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this might be because sustainable
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practices make companies
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less vulnerable to things like ethics
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scandals or a massive oil spill
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simply put focusing on esg is good
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business for the long term
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and while impact-oriented funds have
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long been derided as more expensive than
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their counterparts
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their recent rise in popularity has
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driven major fund companies to enter
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into a price war
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to offer the cheapest esg funds
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blackrock and vanguard have esg funds as
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cheap as two dollars per year for every
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thousand dollars invested
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while still slightly more expensive than
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a pure index fund
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due to the need for esg analysis the
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difference
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seems to shrink with every passing year
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so how do you get started
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if you're a diy-er you can make your own
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custom tailored portfolio of positive
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impact stocks based on their esg ratings
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online tools like sustainalytics allow
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you to compare esg ratings for
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any publicly traded stock there are also
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hundreds of esg mutual funds
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and etfs some are broad in scope like
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vanguard's esg us stock etf
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while others have a focus that is made
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obvious in their ticker or name
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for example there's the ssga gender
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diversity etf that favors a high
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proportion of women in executive
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positions or the ishares
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low carbon target etf that focuses on
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companies
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with a small carbon footprint the year
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2020 left
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a lot of people sick of the status quo
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longing for a change and in 2020 esg
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funds
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also saw record-breaking inflows from
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investors
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wanting to build a better tomorrow so
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the question is
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will you be casting a vote and that's
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our two cents
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hey everybody hello so we're here at the
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end of the video to address some
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comments and questions
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from our last video about how your cell
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phone is ripping you off
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i actually learned a lot just looking
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through the comments of
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how different data is priced in
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different countries
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we have a huge amount of people who i
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know watch us in india
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big shout out uh and your data plans are
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really cheap and i'm jealous
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so let's start with brent he said i know
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friends that have unlimited data
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just so they can stream spotify premium
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on the road just download your music to
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your phone
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and listen to playlists or the radio or
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podcasts and netflix allows you to
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download on wi-fi
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and watch later without streaming i
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honestly forget
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about the ability to download all the
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time
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a little bit of planning can make it so
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you don't really need unlimited data
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but also if you do some planning about
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how you use that data
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of downloading videos or downloading
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music
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it can really be doable dan said i was
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expecting a talk on how we buy
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expensive phones with features most of
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us don't use
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only to keep them a limited amount of
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time
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or how much time we lose with phones
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this is really touching on the
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behavioral
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financial aspect of this i know a lot of
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us are really really guilty of doing
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that right if it's like
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maybe once i buy that then i'll use this
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super expensive feature on this phone or
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all of this storage
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and it's just sort of an emotional
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decision but i think talking about how
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much we're spending on the phone itself
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is
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a great suggestion to look at for a
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future episode thank you
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finally i wanted to highlight what
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nicholas shepard wrote he said
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one place i cannot recommend highly
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enough for viewing different plans
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is whistle out which is a website that
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compares many different data plans from
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different
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providers based on what you need so i
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did a little bit of digging on this i
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had never heard of this so thank you
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so it seems like it's pretty legit let
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me know if you've used it
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in the past after we made this video i
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was like
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we've got to do this on ourselves
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because legit we spend
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way too much and i just never think to
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challenge it it's just one of those ones
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where i'm like
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well i guess i just need this because
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we're on our phones
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all the time we're committed we're gonna
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do it and we will see you
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next time see ya bye before you go you
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should check out tara
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a new channel from pbs digital studios
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with a bunch of great science shows
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you can travel to antarctica fly with
[641]
drones and get a glimpse
[642]
inside of a wildfire all on one channel
[645]
check out the link in our description
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and tell them two cents sent you thanks
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to our patrons for keeping two cents
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financially healthy
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click the link in the description to
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become a two cents patron
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