I read a Chinese proverb which said, “To be a good
artist you need to be a good person.” Immediately
I thought that the same applies to investing: “To
be a good investor you need to be a good person.”
this in mind, I put together a list of questions to help
you test your knowledge about the ethical side of investing
and consuming. But first some background.
is important to know the difference between investing
and speculation. Speculation is primarily using money
with high risk and little certainty of the outcome. In
contrast, investing means taking action with a high degree
of confidence of protecting your capital and getting a
is also important to understand what your investing money
is being used for. At the very least this means investing
in companies with products and services that you believe
in and may well use.
without any thought about the consequences of what the
company is doing is really just usury—money for
money’s sake. With conscious investing we look for
two components: confidence and alignment. Confidence in
the financial outcome and alignment of the company’s
goals with your own.
of the questions that you could ask before investing in
a company include:
• Produce safe and high-quality products that contribute
to a better life
• Provide useful, life-affirming services
• Contribute to the local communities in which it
• Support the ecosystems on which they depend
• Invest in the health and development of its employees
• Treat their investors as partners in an open and
You could start by looking at the company’s web
site and reading the management statements contained in
the annual reports. After that, you could even write to
the company with specific questions. You can think of
your self as an investigative reporter who has been asked
to write an article on the company.
may not be able to get all the information that you need,
but you will be far ahead of the general investment community
in your understanding of the company. This will be true
not only regarding the ethical side of the business but
also whether it is likely to be a profitable investment.
In other words, in taking steps to be a good person by
evaluating the ethical side of a business, you will also
more likely be a good investor.
see how you go with the questionnaire. It looks at the
areas of food production, gambling, ethical investing,
farmer support, solar energy, greenhouse gases, microcredit
banking, and genetically engineered foods.
Test Your Ethical Investing Knowledge
the following questions to see test your knowledge of
ethical investing and consumer activities.
1: What is the 100 kilometre (or the 100 mile) diet?
The preferred diet during an ultramarathon.
(b) The diet used when running more than 100 kilometres
(c) A diet consisting of foods grown or produced within
a 100 kilometre range of where you live.
2: Aristocrat Leisure, an Australian company, had sales
of $1.1 billion dollars last year, 75% from overseas.
The company produces:
(a) Clothing for the high-end leisure market.
(b) Games for children.
(c) Poker machines and related gambling equipment.
3: What is a positive screen?
(a) Electrically-charged window screens for keeping out
(b) Bed nets treated with insecticide used to combat malaria.
(c) Investment selection in a fund or portfolio that favours
companies that make a positive or ethical contribution.
4: If you go into a coffee shop and ask for a fair-trade
coffee, the owner will:
(a) Become angry because he thinks that you are implying
that he is overcharging you.
(b) Start bartering with you.
(c) Serve you coffee that from a plantation where the
owners are guaranteed a fair price.
5: What is sliver technology?
(a) High-tech food used by fashion models.
(b) Extremely thin credit cards designed so that you can
fit more in your wallet or purse.
(c) Technology developed by the Australian National University
and licensed to Origin Energy for producing very thin
solar panels that use much less silicon.
6: On a population basis, how much more greenhouse gases
are produced in Australia than in Sweden.
(a) About the same.
(b) 2 times more.
(c) 3 times more.
7: What is the Grameen Bank?
(a) A bank established by the World Bank for trading in
(b) A sperm bank.
(c) A bank established in Bangladesh which makes very
small loans to the poorest people.
8: What is roundup?
(a) Cattle driven together for inspection.
(b) Anything herded together.
(c) A herbicide produced by Monsanto that does not effect
the genetically-engineered crops also marketed by Monsanto.
Answers: The correct answer in each case is (c). Here
is more background on each question.
1: Food production. World Watch Institute reports that
the majority of our food ingredients typically travel
between 2,500 and 4,000 kilometres. This is a 25 per cent
increase from 1980 alone. The average meal uses up to
17 times more petroleum products, and increases carbon
dioxide emissions by the same amount, compared to an entirely
advantages of ‘eating locally’ whenever possible
are enjoying fresher and tastier food, supporting your
local economy, limiting the effects of transportation
costs on the environment and your wallet, avoiding the
risk of large-scale food contamination, and ensuring animal
2: Gambling. For the year ending June 2004, according
to figures from the Australian National University Centre
for Gambling Research, total gambling expenditure within
Australia was $16.21 billion. From 1994 to 2004, real
per capita expenditure on gambling increased from $684.03
to $1066.95, representing an average annual increase of
Leisure has a direct interest in seeing gambling increase
in Australia and around the world.
3: Ethical investing. There are two approaches to increasing
the ethical level of an investment portfolio. The first
is a positive or affirmative screen that puts emphasis
on companies that make a positive or ethical contribution.
The second is a negative or avoidance screen that excludes
companies considered to be unethical or not responsible.
answer (b), every year in Africa Malaria kills one African
child every 30 seconds and affects between 300 and 600
million people a year. WHO estimates that insecticide-treated
mosquito nets and speedy access to drugs can prevent nine
out of 10 malaria deaths.
Question 4: Farmer support. Fair Trade is an organized
social movement that works with marginalised producers
and workers in order to help them move from a position
of vulnerability to security and economic self-sufficiency.
Coffee farmers in Fair Trade cooperatives are guaranteed
a minimum price of US$1.26 per pound regardless of the
volatile market. These fair payments are invested in health
care, education, environmental stewardship, and economic
Question 5: Solar energy. The major expense in being able
to mass produce solar panels is the use of extremely pure
silicon. Sliver technology allows for a 90-95% reductions
in the consumption of this silicon compared with conventional
silicon solar cells. The technology was developed at ANU
and is licensed to Origin Energy. It is anticipated to
reduce the cost of power generation by solar cells by
Question 6: Greenhouse gases. The greenhouse effect for
the earth is caused by certain gases, principally CO2,
acting as a blanket and preventing heat from being radiated
away from the earth. The more that these gases are produced,
the faster the warming will take place. According to the
Norwegian organisation Globalis, in 2003 Sweden produced
7.9 tonnes of greenhouse gases per person, which is the
9th lowest country. Australia comes in at position 36
with 26.1 tonnes per person.
Sweden has declared a target of at least a 30% cut in
greenhouse gas emissions by 2020. The Australian government
has stated that it does not wish to set any long-term
7: Microcredit banking. The Grameen Bank is a microfinance
organisation and community development bank started in
Bangladesh Muhammad Yunus. It makes very small loans (known
as microcredit) to the poorest people without requiring
collateral. The system is based on the idea that the poor
have skills that are under-utilized. The organization
and its founder were jointly awarded the Nobel Peace Prize
Approximately 97% of the loan recipients are women and
the payback rate is over 98%. More than half of Grameen
borrowers in Bangladesh (close to 50 million) have risen
out of acute poverty thanks to their loan from the Bank.
Question 8: Genetically engineered foods. Genetically
engineered (GE) crops are crops grown from seeds that
have had the artificial modification of their genes. Foods
that are commonly genetically engineered include corn,
soy, wheat and canola and flax (linseed). Monsanto, a
US chemical and pesticide company, developed a potent
herbicide called roundup. Next, through genetic engineering,
they developed soybeans and other seeds that are resistant
The dangers of GE crops include the fact that there is
evidence of genes escaping much farther away than anyone
predicted so that wild plants and weeds are becoming resistant
to the Roundup herbicide. These genetically modified seeds
can spread through nature and contaminate non 'GE' environments
and future generations in an unforeseeable and uncontrollable
Many people are also concerned about the effect on people
when they eat GE foods. For instance, a recent study in
published in “Archives of Environmental Contamination
and Toxicology” showed that laboratory rats fed
with a GE maize produced by Monsanto have shown signs
of toxicity in kidney and liver. This is the first time
that a GE product which has been cleared for use has been
shown adverse effects in a laboratory.
Dr Price is the developer of Conscious Investor and can
be contacted at email@example.com