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 for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Yasmine de Bray is thematic equity portfolio manager at CPR Asset Management
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?
Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
By Kalpana Fitzpatrick Published
-
What does Rachel Reeves’s plan for growth mean for UK investors?
Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
By Katie Williams Published
-
How to find quality and profitability in financial companies
Opinion Julian Cane, manager of the CT UK Capital & Income Trust, picks three financial companies that drive cash flow, dividends and asset value
By Julian Cane Published
-
Luxury stocks rally after Richemont sales boom – is there hope for the sector?
Cartier owner Richemont’s robust results have boosted sentiment about luxury stocks – but are investors getting carried away?
By Dr Matthew Partridge Published
-
Transformed companies displaying momentum and top-quality growth
Alex Savvides, manager of Jupiter UK Dynamic Equity Fund, highlights three companies as he tells us where he'd put his money
By Alex Savvides Published
-
Should you add Straumann Holding to your portfolio?
Straumann Holding is a global leader in the premium dental-care market
By Rupert Hargreaves Published
-
What’s the outlook for the shipping industry in 2025?
All we know for certain about the year ahead is that it will be volatile. But the container shipping sector thrives on choppy waters
By Rupert Hargreaves Published
-
How to find top-quality companies with sustainable and growing dividends
Ian Mortimer, portfolio manager of Guinness Global Equity Income Fund, shares where he would put his money for sustainable and growing dividends
By Ian Mortimer Published
-
Why Wise could be worth a lot more than its share price implies
Foreign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
By Jamie Ward Published
-
Can The Gym Group pump up your portfolio?
Gym Group was one of the best UK small-cap stocks in 2024 and will beef up your profits this New Year
By Rupert Hargreaves Published