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Investing for democracy

Both progressing and suffering, democracy inspires investment strategies based on exclusion, positive selection and shareholder engagement

Democracy is progressing in quantity, yet regressing in quality. In 2024, a record number of people worldwide participated in elections. However, according to The Global State of Democracy 2024 report, published by International IDEA, an intergovernmental organization based in Sweden, the quality of the democratic process is deteriorating. The decline is marked by setbacks in representation and rights, reduced voter turnout, rejection of results by losing candidates, and irregularities in the vote count. 

Advocates of democracy can be found across diverse spheres, including activists, politicians, academics, and cultural figures. Investors also play a role in this group, often promoting democratic principles through responsible investment, which typically encompasses three main approaches. The oldest, exclusion, involves avoiding investments that conflict with one’s values, such as arms manufacturing, coal production, or tobacco. In contrast, positive selection focuses on investing in initiatives deemed beneficial and ethical, such as renewable energy, nature conservation, or social housing. Finally, sustainable investment may take on the form of shareholder engagement, where investors acquire shares in companies and leverage their position to influence corporate practices from within. More…

Source: Covalence / illuminem

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