Monday, 25 October 2010

Watch you cash

I know the video below is a Green Peace video - an organisation I despise - but they sometimes do good things. Rarely, but still.

I won't argue about Nuclear or Green Peace or BNP. My point of view on the world today is as follows:

Private capital can do wonders. Today, we use it to finance wars, conflicts, weapons, deforestation, non-environmentally friendly projects and activities. Imagine if this money was used differently, say: investing in microfinance banks, financing social entrepreneurs, funding environmentally sound projects and R&D - the world would be a better place. And it's not impossible because we're talking about Socially Responsible Investments (SRI), hence there is an actual return for the investor - it's not like it's charity or something. Of course it yields less than a regular investment, but at least you know you're doing a good thing.

The world of SRI is rapidly growing, be part of it. Even companies totally unrelated to social responsibility are now included in SRI funds because: they recycle, they install energy saving bulbs in their offices, they only use recycled paper, they invest in water in developing nations (Nestlé), the food in their restaurants is only fair trade and organic, etc. These moves may be lame, but it's a start. These big corporations are noticing that the trend is now "green" and they're switching to it to get YOUR attention.

Ask your banker to tell you more about it. If banks see that their clients are expressing a strong interest in this topic than they'll shift all their attention to it. Banks are like whores, they go where the money is, it's not their intention to finance nuclear facilities, but it is where profits are.

Private capital = your money can help finance:

- microfinance banks who reach the poorest and most excluded populations in the world. They get to start up a new business and create a stable economic environment for society. In the 90s, about 80% of Peru's population was excluded from the traditional financial system, not contributing to any local economic activity (or maybe just illicit businesses). Today, thanks to microfinance most of the population has access to financial services and small businesses contribute to 47% of the country's GDP.

- environment tech start-ups: with private capital flowing in, they can increase their allocation for R&D and discover new ways to limit our negative externalities in our over-consuming lives. New ways to manage water or waste. Less polluting building and manufacturing techniques, etc.

- social entrepreneurs: many of them live in developing countries and know exactly what their population needs. Their creativity has led to: 1$ glasses, 100$ computers, websites for low income-job search, alternative fuels made out of trash, etc. These guys have the ideas but they lack the funds.

- etc.

It doesn't mean that all or most of your portfolio should be invested in SRI, but at least some of it, just for the good of your conscience.

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