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Please submit questions or corrections to Adam Wilson at adam.wilson@downbound.com.
Vegan Investing
An article written by Adam Wilson
Vegans are used to considering the ethical ramifications of their decisions. However, investing is not an area that most people should make decisions about without professional guidance—lack of experience and training can lead to very costly mistakes. Hence, our investment advisors must understand and support our unique ethics when advising us about our investments. Unfortunately, finding such wonderful advisors is easier said than done. Investing with vegan ethics is such a strict exercise that most investment advisors, even those familiar with socially responsible investing, will find it far too time consuming to take on the special task. This is why we, as vegans, must accept extra personal responsibility in organizing our own investments.
As a first step, we should define the characteristics that a company must exhibit in order to be considered vegan. In strict terms, most of us would agree that a vegan company is one that has made it policy to have no direct business in animal products (leather, meat, dairy, wool, etc.). Furthermore, it seems reasonable that a vegan company should be in an industry that generally does have direct business in these products; in other words, the company is doing something to change its industry for the better. For example, while a bank may not have direct business in animal products, it is more than likely that this is a matter of coincidence rather than ethics. For a bank to be considered truly vegan, it should somehow incorporate vegan philosophies into its business—simply being in an industry that does not generally require the use of animal products, is not enough to be considered vegan. It is next to impossible for a company to be vegan without that being the explicit intention of its management.
Strictly speaking, a vegan investment is an investment in a vegan company. However, you may be disappointed to learn that it is virtually impossible to build a healthy investment portfolio comprised entirely of vegan companies. This is a painful reality that we must accept in order to look after our own financial well-beings. There simply are not enough vegan companies, with publicly traded stock, to make up a properly diversified investment portfolio. Hence, compromises must be made. One rule of thumb, which should not necessarily be yours, is that a company can be considered ethically suitable as a vegan investment so long as that company makes a significant contribution to furthering the cause of veganism. For example, a company that produces a fantastic line of vegan products along with dairy or meat products could possibly be considered ethically suitable as a vegan investment, so long as its vegan products make up a sizeable portion of its business. Of course, investing in these types of non-vegan companies provides funding for their cruel practices, but it also provides funding for their ethical practices. The cold truth is that it will be a long time yet before we live in a vegan world, and the more mainstream (non-vegan) companies that at least adopt vegan options, the quicker veganism will become fashionable to the masses. By financially supporting companies that at least provide vegan options, we encourage those companies and others to become stronger participants in the vegan marketplace. However, veganism is very much about personal ethics—you will have to use your own ethics to choose which companies are ethically suitable for your own investment portfolio.
While the expansion of veganism vitally depends on vegan companies receiving funding from investors, the primary reason for investing is usually to make a profit. Hence, it is important to consider the financial quality as well as the ethical quality of each company before making an investment. In most cases, it would be imprudent to jeopardize your family’s financial future by investing in companies strictly for ethical reasons. A company may exceed all of your ethical expectations, but if it cannot generate profits, it will not survive, you will lose your money, and veganism will be none the better for it. Planning and research will do wonders to ensure that your money works hard for both you and veganism.
Nevertheless, even prudent investment portfolios made up of financially viable companies carry risks. The stock market offers no guarantees, and is notorious for its seemingly nonsensical upswings and downswings. However, while these gyrations occur frequently from day-to-day and month-to-month, long-term statistics clearly show that price movements in the stock market have an upward bias. Not only has the stock market recovered from every crash and recession in history, but also it has proven to be a remarkably safe and profitable place to invest for the long-term. Of course, as a long-term investor, you must be willing to ride out the short-term volatility and not mistake it for long-term risk.
All of this is not to say that there is no long-term risk in the stock market. The long-term risk of losing money in the stock market becomes a concern when very few companies make up your portfolio. This is a risk that vegan investors must be acutely aware of, because there are not very many ethically suitable investments for us to choose from. The principal drawback to vegan investing is that companies suitable for vegan investments number in the tens, whereas companies suitable for purely profit-motivated investments number in the thousands. This makes it difficult to create diversification within vegan investment portfolios.
Diversification is the practice of investing in a significant number of companies from a variety of industry sectors. Diversification limits the negative effect on the overall portfolio when one stock or industry suffers. But the risk that one stock or industry will suffer over the long-term is much lower than the risk that it will suffer over the short-term. Hence, diversification’s principal benefit is that it smoothes out short-term fluctuations in the overall portfolio’s value. For long-term investors, short-term fluctuations should be of little worry. So, while lack of diversification may make vegan investment portfolios more volatile than fully diversified portfolios, the long-term expected returns should not differ substantially.
Vegan investing is more difficult than purely profit-motivated investing, but it is not necessarily less profitable. From 1997 to 2002, the vegetarian food market grew by approximately 70 percent in the United Kingdom and 400 percent in the United States. The vegan marketplace is growing steadily as consumers become more health conscious, environmentally concerned, and ethically aware. Companies that can dominate in this niche market have every opportunity to generate attractive returns for their investors.
The final step in building your vegan investment portfolio is determining which specific companies you deem to be both ethically and financially suitable. You are the expert on your ethics, so you are the best person to determine which companies meet your ethical requirements. However, if you are not experienced in analyzing the financial positions of companies, you should seek professional assistance in that area. You can either hire an investment analyst to perform this analysis for you, or you may wish to purchase investment research from an investment firm that covers the companies you are interested in. The latter may be least costly, because the same research is sold to many clients, rather than customized for individual clients.
INVESTMENTS
Below is a list of publicly traded companies in the vegan market. This is not an exhaustive list, and there are not enough companies listed here to make up a financially sound investment portfolio. In addition to investigating these companies, you may want to look into other industries that help to make this world a better place, such as alternative energy, recycling, and sustainable development.
Albany International Corp.
www.albint.com
New York Stock Exchange: AIN
Albany produces PrimaLoft, a patented synthetic alternative to down for bedding and outdoor wear.
Archer Daniels Midland Company
www.admworld.com
New York Stock Exchange: ADM
ADM wholly owns Haldane Foods Group (www.haldanefoods.co.uk), which specializes in non-GM vegetarian and vegan foods.
Burcon Nutrascience Corp.
www.burcon.ca
Canadian Venture Exchange: BU.V
Burcon is developing a canola protein isolate, which is to compete with soy, dairy and egg proteins in the multi-billion-dollar protein ingredient market.
Condomi AG
www.condomi.ag
Frankfurt Stock Exchange: CAGG.F
Condomi intentionally avoids the use of animal products in its condoms.
Galaxy Nutritional Foods, Inc.
www.galaxyfoods.com
American Stock Exchange: GXY
Galaxy produces non-dairy cheese and other dairy alternatives.
Gardenburger, Inc.
www.gardenburger.com
OTC Bulletin Board: GBUR
Gardenburger produces an assortment of meat alternatives.
Nutraceutical International Corp.
www.nutraceutical.com
NASDAQ National Markets: NUTR
Nutraceutical produces the VegLife brand of nutritional supplements, which is suitable for vegans.
TenderCare International, Inc.
www.tushies.com
OTC Bulletin Board: TCAR.OB
TenderCare produces the Tushies brand of disposable diapers, which are free of animal products, gel, latex, perfume, and dye.
So Natural Foods Australia Ltd.
www.sonatural.com.au
Australian Stock Exchange: SNF.AX
So Natural is Australia’s largest manufacturer of non-GM whole soy bean beverages and foods.
The Hain Celestial Group, Inc.
www.hain-celestial.com
NASDAQ National Markets: HAIN
Hain Celestial owns a large variety of natural food brands, including vegetarian/vegan brands such as WestSoy, Yves, Casbah, Farm Foods, and Westbrae Natural.
Tofutti Brands Inc.
www.tofutti.com
American Stock Exchange: TOF
Tofutti produces a variety of non-dairy soy food products, which include frozen meals and deserts, candies and nuts, cheeses, baked goods, and nutritional supplements.
United Natural Foods Inc.
www.unfi.com
NASDAQ National Markets: UNFI
United is the largest publicly traded wholesale distributor to the natural and organic foods industry in the U.S.
Vitasoy International Holdings Ltd.
www.vitasoy.com
Hong Kong Stock Exchange: 345
Vitasoy produces the Vitasoy brand of soy milk and the Vita brand of tofu.
Whole Foods Market Inc.
www.wholefoodsmarket.com
NASDAQ National Markets: WFMI
Whole Foods is the world's largest retailer of natural and organic foods, which include extensive vegan options.
Wild Oats Markets Inc.
www.wildoats.com
NASDAQ National Markets: OATS
Wild Oats is one of the largest retailers of natural and organic foods, which include extensive vegan options.
Good luck and good fortune!
THE INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE, BUT NO GUARANTEES ARE MADE AS TO ITS ACCURACY OR COMPLETENESS. THIS REPORT IS NOT, UNDER ANY CIRCUMSTANCES, TO BE CONSTRUED AS PERSONALIZED INVESTMENT ADVICE, NOR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES. THIS REPORT IS FURNISHED ON THE BASIS AND UNDERSTANDING THAT DOWNBOUND INC. AND ADAM WILSON ARE TO BE UNDER NO RESPONSIBILITY OR LIABILITY WHATSOEVER IN RESPECT THEREOF. THE PORTFOLIOS OF DOWNBOUND INC. AND ADAM WILSON MAY FROM TIME TO TIME INCLUDE SECURITIES MENTIONED HEREIN.
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