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What is an Ethical Investment? Transform Lives with your Money

What is an Ethical Investment? Transform Lives with your Money
16 February 2021

Investing for Impact

By opening a Share Account with us, you are investing in withdrawable shares: £1 is equal to one share. We pool your investment and use these funds to make loans to organisations of farmers and craftspeople as well as some fair trade buyers. The loans typically fund seeds, plants, materials, crops, equipment or finished goods. Once the crops or crafts are sold, the organisation repays Shared Interest the capital plus a fair rate of interest. The funds can then be recycled and lent out again, although the investment will always show on your account.

As a member, you will have a democratic say in our social aims and future success, with an opportunity to attend our AGM and member events. We will keep you informed with regular statements detailing your investment and a quarterly member magazine. You can also choose how you would like to receive these by post or email. Our secure Member Portal also enables you to keep up to date with your Share Account online.

Making Your Money Matter

Globally, nearly 570 million households depend on smallholder farming for their livelihoods. It is estimated that smallholder farmers produce about 35 per cent of the world’s food. However, they often experience food insecurity and financial exclusion, which leave them unable to invest in their farms and increase their productivity and incomes.

Shared Interest provides finance and works in parts of the world where other lenders are less keen to operate. We focus on reaching small farming and handcraft groups in disadvantaged areas, and we know that 70% of our customers have no other source of financial support.

The businesses we support range from small producer organisations to large scale coffee and cocoa co-operatives. We offer a variety of lending options that enable our customers to finance orders, access working capital, purchase essential machinery and infrastructure, and make advance payments to farmers and artisans.

Last year, we made payments totalling £49.2 million to 173 organisations in 45 countries. The entire Shared Interest team helps make this possible, including our amazing investors and volunteers. 

The Benefits of a Shared Interest Investment

  • Help farmers adapt and respond to threats of climate change.
  • Create employment opportunities for young people.
  • Empower women with access to training, resources and income generating activities.
  • Enable farming co-operatives to grow and support thousands more people.

Why do we lend to buyer organisations?

We are also one of the few social lenders to provide credit facilities to buyer organisations in the Northern Hemisphere.

In line with the Fair Trade Principles, buyers are required to provide producers with a 50% payment on placing an order. This can put financial pressure on the buyer’s cash flow. Shared Interest helps fill this gap by sending money to producers on their behalf.

Our finance to buyers also allows them to pay farmers and artisans upfront, so that they in turn can buy the things they need to sustain their business, like seeds or materials.

Some producer groups are too small or too risky for Shared Interest to finance directly, or are located in countries where we cannot provide funds - such as India, Uzbekistan, Bangladesh, and Nepal.  By providing finance to buyers working with producers in these regions, we can provide indirect support.

How have customers been affected by the impact of the pandemic?

Amidst huge challenges, buyers have been finding new ways to help producers protect their communities and livelihoods. Unfortunately, many handcraft organisations were already suffering before the pandemic due to declining sales, which had negatively impacted some producers in Asia, most particularly India and Bangladesh, where the majority of handcraft producers are located.

Many producers in Asia continue to face challenges, due to Covid-19, as small retail stores have been closed and several trade shows cancelled. The entire supply chain is affected as delays in selling the goods also means that some buyers will not be in a position to negotiate new orders with producers.

In addition, some countries have restricted the export of non-essential goods, meaning that buyers are not only unable to receive products from their suppliers, but are also struggling to send payments to them.

It has been incredibly inspiring to see so many buyers starting their own fundraising campaigns to help artisans, or using some of their profits to support the communities they work with.

The Importance of Increasing Investment

By Stephen Thomas, a Shared Interest member and council representative

As Shared Interest Society reaches 10,000 Share Accounts, our organisation’s growth can be a source of pride in work well done. It ensures that our reach is greater as we increase our assets and so our potential to influence events around the world. 

Like most of us, I am not an economist by training, so my grasp of the practical workings of forces of supply and demand is hazy. However, what struck me clearly in my first meeting as a new Council member this Summer, was the frustration that exists when the organisation does not have enough money to satisfy need. A new concept was put before me – that of the ‘pipeline’ of financial support; at present, loan requests from overseas are unable to be fulfilled because of inadequate sources of capital here. Demand for our lending is often oversubscribed, as applications outstrip the ability to supply capital.        

It is good to see that our early 2019 Rule changes mean flexibility in the currencies in which people can invest (with US Dollars and Euros now acceptable) and that the age at which young people can open accounts has come down. These alone will not clear the blockage in the pipeline however – more liquidity still is needed to ensure we have sufficient funds to lend.              

The biggest potential for de-blocking the pipeline lies instead with current investors putting more funds into their own accounts when feasible, or getting friends and family to open accounts, so that sums available for investment increase. We continue to be the only social lender willing to finance almost three-quarters of smaller, more vulnerable groups and co-operatives in our Latin America and Sub-Saharan Africa portfolio. As members, we all have our small part to play in assisting the Society get closer to its goal.                        

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