Animal cruelty has leapt to the top of a list of investments to avoid. John Berry, of Pathfinder Asset Management, discovers there’s been a change in social values.
When a recent survey showed that nine out of 10 Kiwis believe animal cruelty should be avoided in investment portfolios, it caused a shockwave through the New Zealand investment industry.
Rather than tobacco, gambling or landmines, animal cruelty was number one in survey of what New Zealand investors don’t want in their portfolios.
Back in 2016, it was KiwiSaver schemes holding shares in tobacco companies and landmine manufacturers that caused outrage.
Removing landmines and tobacco reflected the state of play back then, but social values continue to move on. Now animal cruelty tops the list, followed by human rights abuses and labour rights abuses.
Until now, the focus has been on tobacco (now 4th), gambling (5th), military weapons (7th), adult entertainment (11th) and alcohol (14th). The survey results aren’t wrong – a recent Australian survey placed similar importance on animal welfare. We’re seeing a change in social values.
Approaches to animals vary
Very few fund managers mention animal welfare in their fund documents, and approaches vary. At least one manager limits their animal-related exclusions to companies engaged in whaling.
This is a sensitive topic in New Zealand.But only a handful of small companies are involved in whaling, so there’s little effort needed for fund managers to avoid them.
Another manager screens out genetically modified organisms (GMO), but then confuses their position by allowing GMO research and development.
Another supports animal welfare by excluding factory farming and livestock exports. This approach still allows animal testing, fishing, or farm-related companies.
Look closely at the companies
This highlights that if, as an investor, you’re concerned about animal welfare, look closely at the companies held in a fund and decide whether the fund manager’s policy meets your personal ethical standards.
This surge in animal welfare concerns is a global phenomenon, reflected in huge growth among vegetarians and vegans. One study found 15 per cent of the UK population is vegetarian or vegan.
Options to replace milk and meat are now thriving growth businesses. There are plant-based products, and new products that were science fiction a decade ago. They’re an ethical choice and can make a solid contribution to reducing the environmental impact of food production.
It’s not as easy as it sounds to set up a global equity fund with strict animal welfare criteria, like avoiding animal products and animal testing.
Pharmaceutical, cosmetics, and beauty companies are involved in animal testing, and animal products are widely used by many food and clothing businesses.
Few options for animal welfare
There are surprisingly few investment options focusing on animal welfare that would be suitable for someone wanting to invest consistently with vegetarian or vegan values.
One option in New Zealand is Pathfinder’s Global Water Fund, which recently started screening for animal welfare, animal testing, and animal products.
The fund, which has been operating since 2010, held just one company of concern, involved in testing water and livestock. It was removed.
The fund invests in companies working to solve some of our planet’s most pressing issues, like water pollution, water access, and water supply sustainability.
The fund now avoids issues around animal cruelty and animal testing. The resulting vegan-friendly investment fund hit the news as a New Zealand first.
There’s no one answer
It’s important to remember that blending ethics and social responsibility into investing is very personal – there’s no single right answer.
Investors may want to take animal welfare into account for many different reasons. They may be concerned about environmental degradation, climate change and future food shortages, as the world’s population is expected to grow to nine billion by 2050.
Or they might just love animals. It may sound unconventional, or even bizarre, but investors should expect to hear a lot more in future about how animal welfare and cruelty affects their savings.
First published 26 November 2018
Story by John Berry
This article does not contain any financial advice and has not taken into account any particular person’s circumstances. Before relying on it, we recommend you speak with a financial adviser. This story reflects the views of the contributor only. Content comes from sources that we consider are accurate, but we do not guarantee that the content is accurate.