Is socially responsible investing possible? can we invest only in stocks of companies which are doing only good things? Maybe. Maybe not. It depends.1 Feburary 2022
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I've been investing in stock market for as long as 4 years. A majority of this was with mutual funds. Most recently, along with mutual funds, i've also started investing in stocks directly.
It hasn't been so long but I can't wait to see how my portfolio grows over the years to come.
Here's my current portfolio. It's a mix of good old fashion mutual fund and direct stock market. I have stocks from Tata Motors, IRCTC, Relaxo, Zomato divested out of Tata power with the aim to boost renewable Energies for future India.
To keep up with my social responsibility, I've considered thinking, if my stock portfolio is within the bounds of socially responsible investing. The more I look into it i realise it may not be socially responsible investing.
But then again what is socially responsible investing?
socially responsible investing is when an investor invests in companies that are considered to be good for society. There is no agreed on definition of what constitutes socially responsible investing, but an investment would generally exclude tobacco, weapons, alcohol and nuclear power.
My portfolio, has a huge share in ITC. Now they do have biscuits and 5 star hotels in their umbrella, but their huge chunk of profits comes from cigarettes.
I like ITC. I think it has potential to explode in coming few years. but I don't think it's socially responsible investing. So what do I do? what are my options here?
I can sell off my ITC shares and invest in something else. this is the easiest option here, but ever since i'd started investing i've always heard do not sell your stocks unless you absolutely have to. And i don't want to budge on that philosophy. because if start selling now what's stopping me from selling again sometime in future, and perhaps even again after that?
So maybe for me socially responsible investing means something different. That is investing in companies which know how to use the money well, and are not causing harm to society by intention. Sure ITC makes cigarettes, but cigarettes are not illegal. ITC does not sell cheap cancer sticks, their cigarettes are priced reasonably well. So is it more socially responsible to invest in ITC than say a cigarette company which sells Bidis?
Another thing is i have companies like Reliance Industries which has got interests in petroleum business too along with renewable energy sources. This mix of interests is a bit conflicting.
But I do know one thing, sustainable growth is always better.
In the end, I've made up my mind. If I go 100% socially responsible investing, I will miss out on huge wealth creating opportunities. So maybe i'll be 70-80% into socially responsible investing. The rest, well i'll leave it up in hands of the buyers.