Again on the business side of sustainability, I’ve been trying to do some research into socially responsible investing, and while I haven’t got far, I have made some interesting discoveries.

First of all, contrary to popular belief, ethical investments are actually profitable. In the US, both the Domini and Citizen’s families of social mutual funds regularly outperform the S&P 500 index. Likewise, in Canada, the Jantzi Social Index of screened investments tends to do better than the S&P/TSX 60 (albeit only by a few percentage points). Many of the factors that fund managers screen for when putting together SRIs overlap with those that help to predict long-term stability and profitability for normal funds. Good business practices, labour relations, transparency, and ethics help prevent Enron-style implosions for stockholders, so it only makes sense that funds would be doing the analyses anyway.

The second revelation I had was that SRIs can be pretty bullshit. I e-mailed a portfolio manager today about them, and she gave me a mutual fund recommendation. I assume that she offered her advice on the basis of the fund’s strong performance, but when I delved a little bit into its holdings, there were major investments in EnCana (an Albertan oil and gas giant), and fucking Suncor, the 2nd largest oil sands developer in the country behind Syncrude. Apparently the reason that they’re in the portfolio is because they represent “best-of-sector” environmental and social practices, allowing the managers to stay diversified. I suspect this problem is less prominent in other countries, but in Canada, oil and mining make up a huge part of the market, so it’s pretty difficult to get away from evil business.

So the research continues. I’d really prefer to stick with mutual funds since they’re so much easier to manage, but I’m not interested in putting up with shit like that. Now if only Nanosolar would get on with it and put out an IPO, I could make my first million with an easy conscience…