Take Stock

I was in the sauna at the Y and chose to leave after just a few minutes because of the conversation the two guys in there were having about stocks and trading. Money talk is the last thing I need in my ears when I’m trying to relax and work out some kinks in my neck and my psyche.

To be honest, I am probably not the first person you should trust regarding stock market advice, as my only foray into stocks was in a middle school economics class where we learned about the market and then selected a virtual investment portfolio to track and report on. My selections did turn out to perform the best in the class over the semester, rah for me. I don’t really know why; I was 13 years old, for goodness sake. This was also before the full emergence of the day trader and penny trader markets, so volatility was entirely different.  

The guys in the sauna were talking about penny trading (what service to use) and also about whether to rely on big oil companies for investment security or not. And, despite my bowing out, the conversation got me thinking about a couple of things.

First, there are changes that must be made regarding long-term investment because of the current reality of climate change. This is real stuff, and will affect companies differently, and investing without understanding the impacts of climate change is certainly dangerous. If a long standing oil company is innovative and exploring other fuels and service models, they will likely be around and remain a viable investment, though I wish everyone would diversify completely off of fossil fuel. If not, what is their true investment value, and will they be productive even 10 years down the road? See this NASDAQ article on just this point.

Second, on a higher level theory view, the stock market is currently a vehicle solely for making money. The market itself creates no product, no innovation, no services, and offers no solution for our greater good. The term “leach” swims around in my brain. Yes, I know there is a mechanism whereby the invested money does influence the companies, but, for the most part, the market is about perceived value and has little to do with the fact of value just as the GDP has precious little to do with prosperity.

In an ideal approach to investing, meaning one that is honestly looking to support and help companies succeed, there is real impact. Yet what percentage of people are in the market for that purpose? Even good minded people don’t usually focus their investment on companies, but on an index selected to earn at a certain pace and risk level, often with no information about individual companies within that index. Even well-intentioned investors or those looking to fund sustainable endeavors can find it tough to select “green indexes” as few investment advisors are knowledgeable about the benefits, even though sustainability indexes perform higher than Fortune 500 indexes. And even with the good intentions, it’s still just investing for a return on the money, and not to see the growth in the company, improvements in products, increase in market share, care and feeding of employees and community at large. 

So what will have to change if the stock market were to become a vehicle for creating market-driven climate change adaptation and mitigation? If it were to use its power for “good” while it is helping people to do well in business and with return on investment?

The stock market is a HUGE database of useful info, useful way beyond making a buck, but we don’t tap into that knowledge to guide global trend. What information should be shared beyond the company name, size, market range and a green arrow or red arrow next to the stock price to indicate pricing trend? I leave this question open, but some ideas are revealed in the list below.

 

Snapshot from the B-Corp website.

Snapshot from the B-Corp website.

  • We need to ensure B-Corps have more prominence in the trading/investment industry. These companies are profitable and prominent, and the resources for B-corps are now entering the multi-national arena of BIG companies, which will make a big difference in traction over the next few years. A green star by any B-Corp would be a simple start.
  • Climate change will affect companies in many ways. Investors must learn that the companies that invest NOW to prepare will be in MUCH better standing down the road. This will be visible in performance over time so long as government doesn’t swoop in to rescue any big companies that don’t have any foresight (the next too big to fail scenario). For now savvy Investors can ask if the company has a sustainability and/or resiliency plan that goes beyond data and leadership structure continuity. It would be a simple start to indicate if a company has a third-party verified GHG emission report. You can’t manage what you cannot measure.
  • Dare I say that we must establish some limit or greater control over sucking the market dry solely to earn a dime, or a million dimes? Perhaps a simple fee added to all quick turn-around trading that would then pay to building the needed data for truly informed investing.
  • Shareholders need to step aside. I know. Crazy, right? But so many companies have screwed their employees and our shared environment and their own future stability by catering to the expectations of shareholders. How often have I seen stock prices go down because a company only earned 30 billion when they had projected to earn 40 billion and their stakeholders became irate. That’s unreasonable. We must make sure the shareholders remain the passive recipients of the valuable work of the companies, instead of the dictators of success margins.

Most of all, I think investment firms, financial advisors and single investors need training in order to ask not only “what is the rate of expected return” but “what will this investment create?”. Innovation? Jobs? Security? Diversity in a community’s economic base? A better widget? More efficient use of resources? If the answer is not there, do we really want to invest? I’m sure many people will say “yes” to make a buck, more’s the pity. But a lot of people, when faced with investing in…nothing worthwhile…may actually choose to find a valuable investment that improves their net worth and the world as a whole. And over time, “doing well by doing good” may well become the norm.

Bank on it (and be greener),

Jodi

 

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