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women lead move to values investing

Friday 26 August, 2016

When I first heard of Warrant Buffet and his ‘Value Investing’ I felt enlivened, until I realised it has nothing to do with values - as in principles or value to society – and instead is about buying stocks that are under-priced.
‘Values’, in the principles sense – as in trust, integrity, respect, care and diversity to name a few - are terms commonly found in company statements or ethics training in the finance sector but rarely used in financial markets, and even less so when it comes to investing.
Perhaps it’s time this changed. According to recent studies, women and millennials care a lot more about ensuring their values align with their investments, and are even willing to forgo profit to ensure it[1].
Despite the rise of ethical, sustainable and ESG (environmental, social, governance) branded financial products and funds, even a careful investor invested in the Dow Jones Sustainability Index for example can end up holding shares in British American Tobacco.

As more women and millennials show an increasing interest in share market investing, they are now ripe to be targeted with investment products and philosophies that provide not just an ESG filter but more importantly a ‘values overlay’.

Whilst ESG data and sustainability ratings are a step in the right direction, it would seem that more is needed for us to be confident in our investments – from a values perspective.
The interests of women and millennials are now ripe to be targeted with investment products and philosophies that provide not just an ESG filter but more importantly a ‘values overlay’.
Values based investing is not an impossible task but does require us, and particularly advisors and analysts, to think differently.
For ‘Trust’ we might inquire into not just litigation and fines but also perceptions, press and public responses. For ‘Integrity’ we can compare statements versus actions and outcomes. Outstanding invoices and supplier and contractor relationships can give a good indication of ‘Respect’. For ‘Care’ we can look at not just what the product or service does, but how they do it and importantly its impact, in the short and long term.
And of course there’s ‘Diversity’, which may matter most to many women. There’s many indicators that can be used from ratios on the Board and across the workforce, to pay-gap analysis, cases of discrimination and harassment and the extent of not just policies but actual practices.
The world is now rich with data, that can be gathered from within organisations, markets and from outside, from the consumers and people that interact with products, services and businesses on a daily basis.
What we’re really trying to get at however is the ‘Ethics’ of businesses and we shouldn’t shy away from trying to work this out, particularly as investors – which we all are through our superannuation. 
We should be considering the social contract of businesses, assessing their social licence to operate and determining if they contribute to a ‘good society.’
The move to ‘Values Investing’ starts with us simply asking the questions – even if it’s just of our financial advisors. But of course the absolute starting point is working out what values matter to you.
Perhaps it’s actually values that have been under-valued in financial markets and it might just be women and young people that finally put them back on the agenda – now that’s something worth being invested in.
Clare Payne specialises in the field of ethics in banking and finance. She is a Consulting Fellow for Ethics in Banking and Finance with The Ethics Centre, Director of The Banking and Financial Services Oath and Chief Operating Officer of Tobacco Free Portfolios.

This article was originally published in Financy


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The Oath

  • Trust is the foundation of my profession.
  • I will serve all interests in good faith.
  • I will compete with honour.
  • I will pursue my ends with ethical restraint.
  • I will help create a sustainable future.
  • I will help create a more just society.
  • I will speak out against wrongdoing and support others who do the same.
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  • In these and all other matters;
    My word is my bond.