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March 19, 2001
Book Review: The 50 Best Ethical Stocks for Canadians
Investment advisor and corporate social research expert pen book on building a socially responsible
investment portfolio of individual stocks.
SocialFunds.com --
Many social investors get their first taste of the stock market by buying shares in a mutual fund.
After gaining some experience and knowledge, some wish to step to the next investing level and
purchase the stock of individual companies that match their values. But how does one choose those
companies? Canadian and even American social investors may find the answer to that question in a
new book entitled "The 50 Best Ethical Stocks for Canadians."
 In their new guide, authors Deb Abbey and Michael Jantzi
take a straightforward, no-nonsense approach to recommending 50 companies suitable for social
investors. An introductory section explains the authors' methodology for evaluating companies from
social and financial standpoints. The remainder of the book, 200 of the 241 total pages, is
devoted to data on the recommended companies. Readers itching for anecdotes about the benefits of
social investing will have to look elsewhere.
The authors are as qualified as any to write
such a book. Abbey is a Vancouver-based investment advisor and vice president of the Board of
Canadian Business for Social Responsibility. Jantzi, creator of the Jantzi Social Index, is
president of Michael Jantzi Research Associates and an acknowledged leader in the Canadian social
investing movement.
In choosing the 50 companies, Abbey and Jantzi first employed some
common exclusionary screens. Companies that obtain significant revenue from weapons-related
contracting, tobacco product manufacturing, and gambling were eliminated. They also screened out
companies that produce nuclear power.
While some social investors exclude whole
industries, such as natural resource extraction, in selecting stocks, the authors use a
best-of-class approach. This allows for a diverse portfolio by not excluding certain industries.
They explain, "We chose companies that were best in their sectors and gave preference to those with
a focus on alternative technologies and best practices in their industry."
The 50
recommended companies include 30 Canadian and 20 U.S. and European companies. The authors note
that foreign companies are also recommended because international markets have historically
outperformed the TSE 300 by almost 3 percent per year over the past 50 years.
Each company
is rated on six criteria, which the authors claim are screens "that most social investors in Canada
use to determine which companies can be considered socially responsible." The six criteria are
community involvement, diversity in the workplace, employee relations, environment, international
operations/human rights, and products and practices. The authors used outside research, primarily
from Michael Janzti Research Associates Inc., KLD, Inc, and CaringCompany AB of Sweden, to analyze
performance in these areas.
In the author's financial analysis of companies, factors such
as price/earnings, quality of management and earnings momentum were considered. The four-page
sections on each company include charts on financial performance between 1995 and 1999 and stock
performance between 1996 and August 31, 2000.
The four-page sections also have a 1-2 page
written explanation of noteworthy points on the six criteria. This is probably the most valuable
section of the book to social investors, as it empowers readers to choose the companies that
perform well on points important to them.
"The 50 Best Ethical Stocks for Canadians"
delivers exactly what its title expresses; direct, useful advice for choosing socially responsible
companies. Canadian and American social investors looking to invest in individual companies will
find this book a welcome addition to their library.
"The 50 Best Ethical Stocks for
Canadians" by Deb Abbey and Michael Jantzi, Macmillan Canada, 2001.
Buy this book at Amazon.com
©
SRI World Group, Inc. All Rights Reserved.
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