Ethical Mutual Funds – A Better Way to Invest?

The following is a condensed, less academic excerpt of a paper I recently wrote for my final graduate course. It also represents the completion of Task #3 on my 9-Week Productivity Challenge and the beginning of a series of posts here on Earth and Money related the social and environmental impacts of our investments. The series began unofficially two weeks ago with a look at an emerging type of investment vehicle, community bonds, and last week, introduced how we might be funding our own demise, and what corporate social responsibility represents.

In 1992, Michael Jantzi founded Jantzi Research Inc., an investment research firm created to monitor the social, environmental and governance performance of publicly traded Canadian companies. Jantzi used a best-of-sector approach to rank companies relative to each other and to industry best practices. The fundamental problem with such an approach is that a company only has to be better than their peers in order to achieve a high ranking. This can result in a company that is not by most definitions “socially responsible” being labelled as such only because their peers are even less socially responsible than they are.

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