ESG Investing

Cruelty-Free Investing: Building an Animal-Friendly Portfolio

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While cruelty-free investing may not get as much attention as some other impact investing issues, it’s crucial to some investors.

And for those investors who consider the issue important, it’s often a fundamental part of their value system. Typically, investors interested in such a portfolio come at it from one of two angles, said Liz Michaels, Aperio’s Chief of Staff and Director of ESG/SRI: Either they’re concerned explicitly about the humane treatment of animals, or they’re focused on sustainable agriculture and issues like factory farming.

Regardless of the ultimate goal, the niche nature of these decisions requires a bit more work on the part of the investor. “As far as I am aware, there is not a product out there that you can just buy off the shelf that is animal-friendly,” Michaels said. “But I don’t think it needs to be complicated. Most people who have a concern in this area are knowledgeable and informed at least to the degree of being able to say, ‘This is what I care about.'”

Michaels recommends that investors interested in cruelty-free investing sit down with an advisor or asset manager to figure out how to translate their values into an actionable strategy.

The strategy will vary depending on a given investor’s needs and beliefs. Even among investors who want to be animal-friendly, there may be disagreements on how to approach GMO crops or animal testing of pharmaceuticals. “Investors want to look at what is it that most concerns you and where do you want to draw your line on those issues?” Michaels said. “With any issue area that’s really important, because this is not black and white and there is not a perfect solution . . . you have to make a decision about what you can be OK with.”

For some investors, that might mean completely excluding companies, while others might seek out firms that aren’t involved in non-animal-friendly practices. However, some investors interested in cruelty-free investing might go the opposite route, opting to buy into a company with the specific goal of using their leverage as shareholders to enact change.

Pressure from shareholders, for example, was one of the reasons that McDonald’s announced a plan in 2015 to stop using some antibiotics in its chicken production. People for the Ethical Treatment of Animals (PETA) recently purchased shares in Canada Goose as part of an effort to make it stop manufacturing coats with a coyote fur trim, and a coalition of institutional investors has targeted companies known to engage in factory farming.

A key to determining the best method for any individual is finding the right advisor—one, Michaels said, “who is interested in going on the journey and engaging in the process with you. You have to find someone willing to hear that this is of concern to you, and that it’s something you want integrated into your investments, and someone who will engage with you to figure out the right way to approach it.”

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