Ethical Investments
Since I am now earning a full salary, I already get more money than I need for a living. My starting salary is above the average salary in Germany, which is globally a quite high-paying country. This leaves me with many thoughts about how this isn’t really fair by a lot of definitions and I asked myself more than once if I should donate the money I have on top for good use. While I heard many people say things like that, I never heard that people do this.
I do support the idea, that wealthy countries are building their wealth by exploiting other countries/people/nature. The privileges I enjoy only exist because someone else doesn’t have them, otherwise, they wouldn’t be privileges by definition.
Donations
Still, it’s Christmastime and Wikipedia asks again for money despite not needing to. So whom should I trust if even non-profits are lying about their expenses and aren’t investing responsible? An Argument for Wikipedia could be, that it’s better when they get the money, than you spending it one stuff you don’t need. But it would still be better if I’d donate it to Amnesty International then? Maybe, but even they are accused of a toxic work culture. Those should not be criticism to those specific two non-profit projects. After all, those are also run by normal humans and human interactions are often very weird. In fact, I really love those projects, and I am convinced that the money is well invested there.
On the other hand, it makes it very hard to find a good place to donate and spend money on. This is an indisputably true argument, but I don’t think that the best solution to this challenge is to not donate anything at all. I am still thinking about how much and which projects I should support.
But after all, it is also the money I earned from my work. So I should keep it. And invest in the stock market.
Stock market
Even though I am not fully convinced that stock markets are basically a good idea, I do still have an interest in my money not becoming less over time. Coming from above, every winner needs a loser who compensates for your winning. The steady stock market growth seems to grow on the ~90% not investing in the market growth. Their money is becoming less over the years because of inflation. Might be a stupid thesis, I didn’t check that yet. If true, it makes a lot more sense to invest and benefit from the system than to not do it to show solidarity with the other people whose money is becoming less. I would agree that the system is unfair and many people are the losers in the equation, still, I won’t be able to change the finance market in this life. Of course, one could argue that I do encourage the current system through investing in it, but with governments thinking about joining this track for pension systems I don’t think that it’s possible to fully abstain from the stock market in the future.
So here we are now. Where do I sign up for investing?
Independent financial advice
With the approach of so-called Neo-Brokers, investing becomes a lot more affordable and manageable. Still, one has to go through a lot of trips on the internet. Reddit seems to be a source of decentralized opinions about those topics which aren’t provided by companies who want to sell you something. I also found the Finanzfluss Podcast to be a good German source about investing. Basically investing in ETFs seems to be the consensus there.
Ethical ETFs
I heard something about green investments, maybe those are interesting.
I looked up a post about green Investments and found that the very popular MSCI Indices have a version for
- “Socially Respectful Investment” (SRI)
- Emerging Market (EM)
- “environmental, social and governance” (ESG)
In the following table I compared the greatest 10 companies of each index to see what’s in there. Those often make up for between 25-35% of the index, while the whole index invests in a few hundred companies.
| MSCI World SRI | MSCI Europe SRI | MSCI EM | MSCI ESG USA | Triodos Pioneer Impact |
|---|---|---|---|---|
| LU1861134382 | LU1861137484 | IE00BKM4GZ66 | IE00BFNM3G45 | |
| Tesla | NOVO NORDISK | TSMC | Apple | Advanced Drainage Systems |
| Nvidia | ASML | Tencent | Microsoft | Straumann |
| Microsoft | Roche Holding | Alibaba | Amazon | First Solar |
| Home Depot | SAP | Samsung | Tesla | Danone |
| ASML | L’Oreal | Meituan | Alphabet C | Solaredge Tech |
| ASML | Schneider Elec | Reliance Industries | Alphabet A | Acciona Energias |
| Disney | Allianz | Infosys | Sekisui Chemical | |
| Cisco | RELX PLC | JD.COM | Nvidia | D S Smith |
| Coca-Cola | Deutsche Post | China construction Bank | JPMorgan | Persol Holdings |
| NOVO NORDISK | Lonza Group | Housing Development Finance | UnitedHealth | Bakkafrost |
It is very visible, that the EM and SRI indices aren’t very green or responsible at all. They just don’t actively kill or sell coal or as they say it
“The index excludes companies that are involved in businesses related to thermal coal, controversial weapons, tobacco and other controversial industries.” (source)
This isn’t what I had in mind when I searched for responsible green investments. Luckily the Dutch Triodos Bank provides some financial products which actively support the environment. Just to mention it, the German GLS Bank is another bright spot in the banking market, when it comes to ethical behavior.
Those products are often less profitable than the MSCI World, but they aren’t going bad either. In general, I just used the 10 companies invested most by the index as a proxy for the environmental sustainability of the index and did not look a lot at the yearly output as this isn’t the main criteria here, as described above.
Closing words
In the future, I will look into investing in real sustainability-focused investments. This is a lot better than letting the money lay around and makes up for most of the negative parts of the stock market. But the gambling part isn’t fully removed, so I will just hope that everything goes well for me.
This post is mainly to write down my current thoughts, so I can read about my motivations at a recent time but also for others to read and maybe start a discussion.
Just a disclaimer: Thoughts are my own, this is no financial advice and I am not recommending, nor rejecting specific products.