What is Ethical Investing?
Ethical Investing, a unique form of investment which corresponds with the values and beliefs of an investor. It can therefore be defined as an equitable mode of investing. It is essentially a subset of Responsible Investing as they both tend to focus on investments that are morally acceptable and bring about positive societal impact.
Ethical and Socially Responsible Investing (SRI) share some common ground as they both analyze the companies’ activity and how revenue is derived to measure their faith, social and environmental impact.
Socially Responsible Investors (SRI) tend to make choices that are environmentally conscious and avoid companies that have social and corporate governance issues (ESG), or companies that operate in countries with questionable labor, corruption and human rights records. They may also exclude companies from their portfolio that produce products and services that are engaged in tobacco, weapons, alcohol and gambling which usually have a negative impact on society.
Our Investing strategy not only follows the Socially Responsible Investing (SRI) criteria but also examines the most distinctive element which is the avoidance of interest income (usurious practices) and highly excessive (leveraged debt) vehicles, whether nominal or excessive, simple or compound, fixed or floating.
Our Investing Principles
I'm passionate about making a positive difference in your life. Our Investment principles adhere to ethical investing principles, which focuses on an equitable mode of investing based on equity and values. The investment model has an approach that differs from and is a viable alternative to interest based conventional investing. When investing on behalf of our clients, we examine and research each investment holding thoroughly to comprehend how it generates wealth from a profitable as well as an ethical perspective.
How do we accomplish this?
Process, screening and oversight
Using a rigorous globally recognized methodology and internal research, we screen for qualifying companies based on the following factors:
- Qualitative Screen – Business Activity
We are passionate about making a positive difference. In our investment process, we strive to filter out companies involved in activities such:
- Gambling
- Tobacco
- Alcohol
- Weapons
- Adult entertainment
- Pork processing
- Investments involving the payment and receipt of interest
Instead, we focus in areas such as telecommunications, technology, healthcare, real estate and infrastructure, utilities, transportation, industrial, consumer goods, natural resources, sustainable energy and more.
2. Quantitative screen – balance sheet and income statement activity
We focus on companies that are free of excessive debt, do not hoard cash, have considerable assets and have earned a certain amount of revenue. More specifically, we follow the rules below to ensure an investment meets our ethical standards:
Companies must meet the balance sheet and income statement financial ratios thresholds such as;
- Interest-bearing securities/Market capitalization must not exceed 30%
- Interest bearing debt/Market capitalization must not exceed 30%
- Cash and receivables/total assets must not exceed 67%
- Total sum of non-permissible income should not exceed 5% from the total income
Thank you for reading my blog and feel free to share or message me with any questions about our investment strategy.
Sameer