Investing locally in Ethical Companies
One of the defining characteristics of our modern day civilization is that our language has turned drastically Orwellian. In the world of finance and investing, we consider a “responsible” investor to be he or she who is able to maximize their returns through “making their money work for them.” The problem, however, is that the vast majority of people are anything but responsible with how they invest their money.
One definition of responsibility would be “the state or fact of being accountable or to blame for something.” In our globalized economic world, however, almost nobody has any idea where their investments are actually made and how they affect the local communities, watersheds, and ecosystems. It is essentially impossible to be accountable for the effects of your investments when you have no idea where the companies you entrust your money with are actually investing.
Ethical investment harbors begin by breaking with this sense of anonymity that has come to dominate our current civilization. For something to be ethical, you have to be close to enough to be able to know and feel the tangible effects (both positive and negative) of any action or decision.
One ethical investment option, then, would be to invest locally in companies and businesses that are part of the communities where we live. The most resilient businesses will be those with a connection to a community and a place. As the global economy eventually shatters, more place-based economic livelihoods will be necessary. Wal-Mart may no longer be able to provide us with bananas produced on mega-plantations in Guatemala, but a local orchard may very well be able to continue to sell us peaches and plums and other seasonal fruit. The McDonald´s restaurant that we used to visit every lunch hour will most likely not be able to continue to produce cheap hamburgers from cows pastured on destroyed rain forests in Paraguay or Brazil, but a small diner run by our neighbors will still be able to buy chicken and potatoes from local farmers to offer to their customers.
The separation between producer and consumer or between consumer and the sources of their consumption and the end places of their waste was a hallmark of the industrial revolution and the growth of capitalism. It allowed for growth and prosperity (in some parts of the world), but at the same time led us away from any sort of direct contact with the effects of our consumption. The majority of us have absolutely no idea where our food comes from, who sews our clothes, makes our shoes, builds our houses, etc. The global economy has always promised that somewhere in the world there are people willing to work cheaply to provide us with what we need to live. All we had to do was blindly trust in the system to continue to provide us with the consumer goods that made our lifestyle possible.
In a purely practical sense, that system simply won´t last and one of the fastest growing areas of the new economic orders will be local businesses that can provide the goods and services that used to be provided in some hidden part of the world by the global economy. For the ethical investor, investing in local businesses is also a smart and safer investment option.
Furthermore, because of the closeness and proximity between the investor and the business that he or she is investing in, you can make sound, ethical decisions about your investments. If you see that a local restaurant that you´ve invested in is not providing quality service and thus losing customers, you can choose to take your money elsewhere. If you feel that a local farmer you´ve invested in isn´t paying his or her workers fairly, you can also choose to find another farmer who is doing more ethical business.
The successful investor of the future won´t be the person who can read and understand the numbers flashing on the bottom part of the screen of CSPAN or get lucky guessing which way the stock market is headed. Rather, a good investor will be the person who is connected to his or her local community and can discover which businesses and companies are growing through providing quality services and products to help the community regain resilience.
Local Credit Cooperatives
Economist and writer David Korten says that “the proper function of a money system is to facilitate the cooperative connection of underutilized resources with unmet needs. This means a proper financial system should make credit readily available at favorable rates to Main Street businesses that create family wage jobs producing real goods and services. It should make credit scarce and expensive for Wall Street speculators and predators.”
Since speculative finance and predatory lending by mega financial institutions are responsible for the economic chaos that is looming over us, investing our money in local credit cooperatives is another option that makes more sense for the ethical (and smart) investor. Credit cooperatives are locally owned and run financial institutions that use local initiative and build local economic strength.
In countries like Germany, local credit cooperatives provide savings generation and finance to over 75% of all small and medium-sized businesses. Investing your savings in a local credit cooperative will allow you to maintain a closer connection to where your money goes and what it is being used for. If you see that your local credit cooperative is beginning to provide mortgages to unqualified buyers (like the big banks did in 2008), you can divest your savings from that company and find other investment harbors.
Investing in Forests
Finally, another ethical investment harbor worth considering is investing in forests. It´s worth clarifying that we´re not talking about monocultures of fast-growing forest that often times ruins the soil, lowers the water table, and destroys the resiliency of ecosystems. Rather, why not consider purchasing a small tract of abandoned land and dedicating time to planting a diverse forest ecosystem of native trees, nitrogen-fixing pioneer species, and interspersed precious wood. Properly managed, a standing lot of timber could be worth hundreds of thousands of dollars 30-40 years down the road. And if you don´t need the extra income, most trees only grow in value the longer you leave them standing. Another option would be to invest in a woodlot sustainably managed by local farmers and foresters.