In the longer term, however, technology stocks remain a first choice for many investors. Historically<\/a>, they\u2019ve dominated global stock markets and continue to grow at a remarkable rate.<\/p>\n Even during the downward spiral of the pandemic, tech stocks such as Zoom<\/a> and Microsoft<\/a> soared in value as an influx of people started working from home. The question for many investors now is: how can one find profitable investments without supporting unethical activity?<\/p>\n According to investment advisers Morningstar<\/a>, technology stocks account for 24.2% of the top 500 stocks in the United States. Facebook, Apple, Amazon, Netflix, and Alphabet (which owns Google) dominate the market, with a combined value of more than US$4 trillion<\/a>.<\/p>\n Tech stocks also take center stage in Australia. We\u2019ve seen the rapid rise of \u201cbuy now, pay later\u201d companies such as Australian-owned Afterpay and Zip.<\/p>\n At the same time, we\u2019ve seen an increase in the number of Australians moving to ethical superannuation funds and ethically-managed investment schemes. The latter lets investors contribute money (to be managed by professional fund managers) which is pooled for investment to produce collective gain.<\/p>\n It\u2019s estimated indirect investment through these schemes has increased by 79%<\/a> over the past six years.<\/p>\n While ethical investing is a broad concept, it can be understood simply as putting your money towards something that helps improve the world. This can range from companies that advocate for animal rights, to those aiming to limit the societal prevalence of gambling, alcohol, or tobacco.<\/p>\n Although there is no strict definition of ethical investment in Australia, many managed funds and super funds seek accreditation by the Responsible Investment Association Australasia<\/a>. The \u201cethical\u201d aspect can be grouped into three broad categories:<\/p>\n As investors, we must be very careful about the fine print of the companies we invest in. For example, accreditation guidelines dictate that a managed investment fund excluding companies with \u201csignificant\u201d ties to fossil fuels could still include one that earns up to<\/em> a certain amount of revenue from fossil fuels.<\/p>\n So while investment manager AMP Capital<\/a> is accredited, it can still include companies earning up to 10% of their revenue from fossil fuel distribution and services.<\/p>\n Many technology stocks are well-placed for ethical investment, and you can choose to invest on your own, or indirectly via a managed investment fund. In either case, you should do some basic homework first.<\/p>\n 1) Monitor the fund or company to ensure standards are maintained<\/strong><\/p>\n For a company to be listed with the Australian Securities Exchange (ASX) it has to be publicly listed. It is therefore required to submit an annual audit report (audited by third-party auditors) to the Australian Securities and Investments Commission (ASIC), as per the Corporations Act 2001<\/a>.<\/p>\n You can also contact ASIC for further information<\/a> about a company listed on the ASX. The equivalent body for American companies is the US Securities and Exchange Commission<\/a>.<\/p>\n If a company backtracks on the very ethical standards that prompted your initial investment, you should consider withdrawing your investment.<\/p>\n 2) Stay updated on reported ethical breaches<\/strong><\/p>\n Reputable news reports are useful on this front. Amazon, Facebook, and Alphabet<\/a> are recurring names in reports about unethical practices<\/a> in the tech sector.<\/p>\n While you can access plenty of information about a tech company from its own website and distribution channels, this is usually embellished and\/or handpicked by the company itself. Make sure your information comes from diverse sources.<\/p>\n 3) Consider how employees rate the company and why<\/strong><\/p>\n Keep in mind a technology company might be environmentally ethical but still fall down on other issues, such as gender pay parity, for instance. It\u2019s important to listen to employees\u2019 claims<\/a> about a company\u2019s internal workings as such insight may otherwise be unavailable<\/a>.<\/p>\n There are a number of independent sites reporting on corporate culture ratings, including Glassdoor<\/a>.<\/p>\n 4) Assess the environmental, social, and corporate governance (ESG) score<\/strong><\/p>\n One benefit of investing in large to medium-sized<\/span> tech companies is the ability to analyze their ESG score, issued by agencies such as Refinitiv<\/a>. This score reflects how well the company adheres to ethical practice across environmental, social , and corporate governance-related<\/span> matters.<\/p>\n 5) Watch out for buzzwords<\/strong><\/p>\n If you\u2019re looking to invest in clean technology, watch out for buzzwords used in company reports. These are terms which at face value may seem to align with your own ethical investment values, without actually delivering.<\/p>\n For instance, \u201ccarbon net zero\u201d and \u201ccarbon neutral\u201d are not the same thing<\/a>. This is an important distinction to consider if you\u2019re wanting to make environmentally-responsible investments. This article by Angel Zhong<\/a>, Senior Lecturer in Finance, RMIT University<\/a> and Banita Bissoondoyal-Bheenick<\/a>, Associate Professor and Associate Dean Finance, RMIT University<\/a> is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/em><\/p>\n Published March 29, 2021 \u2014 10:13 UTC <\/p>\nGrowth of tech stocks<\/h2>\n
What is ethical investing?<\/h2>\n
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<\/a>5 tips for ethical tech investment<\/h2>\n
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