And according to TheNextWeb, the coronavirus pandemic showed that even established tech companies could suffer from a downturn in the short term, as Apple, for example, faced the problem of temporarily shutting down Chinese manufacturing centers last year.
In the long term, however, technology stocks remain the first choice for many investors, who have dominated global stock markets and continued to grow at a historically remarkable rate.
Even during the pandemic, technology stocks like Zoom and Microsoft have soared in value as people start to work from home, but the question many investors are now asking is: How can one find profitable investments without supporting unethical activity?
According to Morningstar investment advisor, technology stocks account for 24.2% of the top 500 stocks in the US. Facebook, Apple, Amazon, Netflix and Alphabet, which owns Google, dominates the market with a total value of over 4 trillion USD.
Technology stocks are also taking center stage in Australia, with the rapid rise of “buy now, pay later” companies such as Australia-owned Afterpay and Zip.
An increase in the number of Australians has also been seen moving to ethical pension funds and ethically managed investment plans. The latter allows investors to contribute funds (managed by professional fund managers) that are pooled for collective investment.
It is estimated that indirect investment through these schemes has increased by 79% over the past six years.
What is Ethical Investing?
Although ethical investing is a broad concept that can be understood simply as putting your money into something that helps improve the world. This can range from companies that advocate for animal rights, to those aiming to reduce the societal prevalence of gambling, alcohol or tobacco.
Although there is no strict definition of ethical investing in Australia, many managed funds and super funds seek accreditation by the Responsible Investment Association of Australia.
The “ethical” aspect can be classified into three broad categories:
Environmental: such as developing clean technology or engaging in a carbon-free industry
Social: such as supporting innovative technology, reducing social harms such as poverty or gambling, promoting gender equality, protecting human and consumer rights, or supporting animal welfare, corporate governance: such as fighting corruption, promoting healthy employee relations, or institutional transparency.
According to the report, investors should be very careful about the fine print of the companies they invest in.
5 Tips for Ethical Technology Investment in the United States
Many technology stocks are well positioned for ethical investing, and you can choose to invest alone or indirectly via a managed investment fund.
Either way you should do some basic homework first.
1- Monitor the fund or company to ensure that standards are maintained
In order for a company to be listed on the Australian Stock Exchange (ASX), it must be publicly listed. Therefore, an annual audit report (audited by third-party auditors) is required to be submitted to the Australian Securities and Investments Commission (ASIC), in accordance with the Companies Act 2001.
You may also contact the ASIC to obtain more information about the ASX-listed company. The equivalent body for US corporations is the US Securities and Exchange Commission.
If the company recedes from the ethical standards that drove your initial investment, you should consider withdrawing your investment.
2- Stay informed of reported ethical violations
Reputable news reports are helpful in this area.
Although you can access a lot of information about a tech company from its website and its distribution channels, it is usually decorated or picked up by the company itself so make sure your information comes from a variety of sources.
3- Think about how employees evaluate the company and why.
Bear in mind that the tech company may be environmentally ethical but still deal with other issues like gender pay equity, for example. It is important to hear the claims of employees about the internal business of the company because these statistics may not be available otherwise.
There are a number of independent sites that provide reports on company culture ratings, including Glassdoor.
4- Assessment of the degree of environmental, social and corporate governance (ESG).
One advantage of investing in large and medium-sized tech companies is the ability to analyze their ESG score, released by agencies like Refinitiv.
This result reflects the company’s commitment to ethical practices in environmental, social, and corporate governance matters.
5- Watch out for the buzzwords
If you’re looking to invest in clean technology, watch out for the buzzwords used in the company’s reporting. These are terms that on the surface may seem to align with your ethical investing values without actually presenting them.
For example, “net carbon zero” and “carbon neutral” are not the same thing. This is an important distinction to consider if you want to make environmentally responsible investments.