Exploding the ‘that’s the way the cookie crumbles’ myth

It’s a finding that is sure to have the tobacco tycoons coughing and spluttering into their ashtrays, the gambling gang seriously contemplating cashing in their chips and the munitions mob wondering where the target has gone and where next to take aim.

There are a good few others, to boot, the fossil fuel fraternity one that immediately comes to mind…

The finding I’m referring to is that of Responsible Investment Association Australia who, in its 2017 Responsible Investment Benchmark Report released in late July 2017, finally and irrevocably explodes the lingering myth that, when investing, you simply can’t have your cake and eat it.

Yes, you can go with your conscience and invest in companies and sectors that you feel morally and ethically comfortable with. That’s your right and we respect it.

But all decisions have consequences…and these, while leaving you feeling warm and cuddly, will surely leave you with something else too – a less than stellar return on your investment.

Sticking with the baking analogy, that’s just the way the cookie crumbles, we’ve often been told.

Rubbish.

This respected report conclusively trashes the view that responsible or ethical investment must, by definition, sacrifice financial returns.

It trawls through the facts to highlight how, with a new generation of principled Australian investors increasingly demanding to know where and how their money is being invested, almost one in every two dollars is now managed by fund managers engaged in some form of responsible investment.

The Responsible Investment Benchmark Report delves deeper, drawing attention to the finding that those companies and funds that actively promote their commitment to responsible investment – while deliberately avoiding sectors such as armaments, fossil fuels, gambling and tobacco – are on the rise.

Today, there are more responsibly invested Australian share funds around, they are more popular among investors than ever before and perhaps most significantly, much of their appeal is being driven by better than average financial returns.

Yes, there’s no escaping it – these funds have outperformed their equivalent mainstream cousins over three, five and 10 years.

I guess the seminal message we are left with is that when a company is formed, the law says a new person has come into existence. Not a human person but a legal person.

And just as human persons have to reside within a society and obey its laws, they also require a social licence to exist – the karma argument, if you will.

This same logic applies to companies; they require a social licence to operate and do well.

Consequently, those with good karma, those that more closely reflect the mores of society, will do better than those whose scruples might be a tad wanting.

Or, put another way, some investments have enjoyed their halcyon days and are finally running out of puff!

Until next time,

Kate.

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2 thoughts on “Exploding the ‘that’s the way the cookie crumbles’ myth

  1. Kate, thanks for your regular bulletins, they are most interesting. In relation to your latest blog we wonder if you would include Saab Australia in the phrase “the munitions mob “. As I recall you quite enjoyed your time on the Board.

    • Hi Geoff,
      So good to hear from you. I hope you and your family are very well. I’ll let you in to a little secret. I refer our journalist to various reports or articles and he authors the blog for me. Of course I adored my time on the Saab Board and know that you are all “good guys”.
      Warm regards,
      Kate.

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