Do well by doing good with these three socially responsible stocks
Professional investor Yasmine de Bray of CPR Asset Management picks three sustainable and socially responsible stocks that should produce stable returns for investors.
Although social inequalities narrowed during the first half of the 20th century, since the 1980s they have been widening globally. Inequality is now recognised as a critical issue and the pandemic has only reinforced the impact of poverty, health inequality and vast disparities in wealth.
Greater awareness has been promoted by recent suggested changes in policy at the US Federal Reserve that would see it focus on inequality rather than inflation. While reducing social inequality is mostly a political issue, by investing selectively in companies that score highly on equality measures, investors can have an impact.
There is no single definition of inequality, but there are several universally recognised factors that contribute to its widening or narrowing, such as access to education and healthcare, remuneration and tax policy, human rights, diversity and labour practices.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
We believe that if companies address these concerns they will prosper in the long term and gradually bring about a more sustainable and socially responsible investment universe producing stable returns for investors.
A responsible chipmaker
One stock proving the claim that more socially-responsible companies are likely to enjoy a better financial performance is Taiwan Semiconductor Manufacturing Company (Taipei: 2330), known as TSMC. TSMC makes almost 50% of the world’s microchips for smartphones, electric vehicles and other hardware.
The company has been able to ride on the coat-tails of the booming global tech sector to gain a significant share of the market, but its own growth has also been driven by a deliberate effort to invest in tackling income inequality across the business, making it an attractive place to work and luring talent from competitors in the region.
It has a good CEO pay ratio (the gulf between the pay of the median worker and the boss does not appear excessive); provides its workers with superior working conditions and benefits; and insists that the whole supply chain adheres to its strict welfare standards. It is therefore well positioned to continue to take market share and grow with rapid tech development globally.
Global insurer Axa SA (Paris: CS) has the wind in its sails after making good progress on the acquisition of rival XL Group. But it was also recently named the second-most responsible insurer worldwide (it is number two in the Dow Jones Sustainability index), with one of the criteria relating to social impact. The business scores highly on diversity and tax policy, with women making up 54% of the workforce and the business adhering to Organisation for Economic Co-operation and Development taxation guidelines.
Because we are all worth it
Another business that has excelled in its approach to diversity and innovated in ways that do not discriminate by gender or social background is L’Oréal SA (Paris: OR). It has consistently reported strong growth in recent years.
It is well positioned to take advantage of the rising popularity of health and beauty products in the Asian market, with a strong presence in China. But the group has also managed to maintain its impressive approach to human rights and diversity on a global scale. Its gender pay-gap, moreover, has slipped from 10% in 2007 to 2%.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Yasmine de Bray is thematic equity portfolio manager at CPR Asset Management
-
Four AI ETFs to buy
Is now a good time to buy AI ETFs? We examine four AI ETFs that investors might want to add to their portfolio
By Dan McEvoy Published
-
Chase boosts easy-access interest rate - savers could earn 4.75%
Chase is offering a boosted interest rate which is fixed for six months, on top of the standard variable rate
By Jessica Sheldon Published
-
Share buybacks rise in the UK – what effect will it have?
Share buybacks are gaining popularity in the UK – good news for investors
By Rupert Hargreaves Published
-
Should you bet on US stocks?
You don’t have to be bearish on US stocks to worry that they are now such a large share of global indices
By Cris Sholto Heaton Published
-
Is now the time to buy Marshalls?
Former market darling Marshalls, a landscaping and building products supplier, looks too cheap. Is it time to buy this once-admired stock?
By Jamie Ward Published
-
Top UK stocks with healthy cash flows and dividend yields
Three promising UK stocks according to Alan Dobbie, co-manager, Rathbone Income Fund
By Alan Dobbie Published
-
Warren Buffet invests in Domino’s – should you buy?
What makes Domino's a compelling investment for Warren Buffet's Berkshire Hathaway, and should you buy the UK-listed takeaway pizza chain?
By Dr Matthew Partridge Published
-
Invest in Grainger: a landlord with growth potential
Grainger is putting years of uncertainty behind it and investing for expansion
By Rupert Hargreaves Published
-
UK equities are set for a bull market – buy now
Investors shouldn’t wait for a crisis to buy UK equities, says Max King. Do so now, in the expectation of much better returns in due course
By Max King Published
-
How to find top-quality income picks in the UK stock market
Four top-quality UK stock market picks according to Iain Pyle, manager of Shires Income Trust
By Iain Pyle Published