30 Dec 2022
Investors have the power to influence even the biggest business entities, and are joining human rights advocates in using that power. Investors can follow through on their conscience—and invest where it counts.
Can investing be a mission, a statement, or a belief that the world can and should be a better place for all? Yes. Investors who are passionate about human rights use their investing not just to plan for their future but to support causes they believe in, from Black Lives Matter to climate change to women’s rights and more.
They are joining a growing movement—also part of socially responsible investing and investing with impact—of being part of the solution, with mutual funds and ETFs following suit, featuring companies that can score high on established human rights benchmarks (1).
Here is what you need to know about investing for your future—for your individual financial plan as well as the sustainable future of society.
Human rights, the United Nations states, are “rights inherent to all human beings, regardless of race, sex, nationality, ethnicity, language, religion, or any other status. Human rights include the right to life and liberty, freedom from slavery and torture, freedom of opinion and expression, the right to work and education, and many more.” And most importantly for businesses and governments, the UN states, “Everyone is entitled to these rights, without discrimination.”
With this right comes the obligation of companies and governments to address, mitigate, and compensate for human rights abuses. The UN’s Guiding Principles on Business and Human Rights, which were unanimously endorsed in 2011, reaffirms this obligation and emphasizes that companies have a responsibility to respect human rights. Companies must ensure that they are not profiting from forced labor or land grabs or child labor, for example, and report their progress in a verifiable way. That means even more information for investors to sift through, but there are ways to assess the human rights records of companies or funds you may want to invest in.
The social factor of human rights (the “s” in ESG) is essential to consider when building a portfolio that supports a sustainable future. Many investors rely on benchmarks provided by Environmental, Social, and Governance (ESG) markers or the Corporate and Human Rights Benchmark (CHRB) before deciding to invest in a company.
Environmental, social and governance (ESG) data and metrics give investors insights into the success and value of a company’s policies, including human rights, whose violations often occur in tandem with other ESG factors. The COVID-19 pandemic highlighted inequalities but the silver lining was that communities and companies reexamined priorities, from the impact of climate change to human rights. An increase in global fund assets in ESG funds has set ESG assets on a trajectory to more than $50 trillion by 2025 (2). Essentially, socially conscious investors are in good company.
Investors who want their money to help support human rights around the globe look for companies and funds that measure up to their high standards. But can these assets’ potential growth also measure up? Because good business requires good business practices, your money can do good and perform well.
Socially conscious investors have many reasons why they invest in human rights:
Human rights investing has the power to make an impact. For example, divestment played an important role in the anti-apartheid movement in South Africa.
There is mounting evidence that companies tend to benefit financially when they uphold human rights. That counts as win-win for socially conscious investors who want their portfolio to reflect their values and support their financial plans.
Addressing human rights means working toward large, systemic change. As an investor, it’s possible to have a mission—like addressing systemic human rights issues—and a plan: to pressure companies to address social issues, with human rights at the forefront.
ETFs and mutual funds make investing with a clean conscience easier than ever. A search on Magnifi suggests there are a number of different ways for interested investors to support this part of the ESG landscape:
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Disclosures
This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. Investors should carefully consider the investment objectives and risks as well as charges and expenses of all innovation-related securities before investing. Read the prospectus carefully before investing. ETFs and mutual funds are actively managed and there is no guarantee that the manager’s investment decisions will produce the desired results. All investments involve risks, including possible loss of principal. ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and fund expenses will reduce returns. You should carefully consider a fund’s investment goals, risks, charges and expenses before investing. Download a summary prospectus and/or prospectus, which contains this and other information and read it before you invest or send money.