Lithium Mining – A Quandary for Socially Responsible Investing

The recent attention of the Tesla IPO attention has also been drawn to the manufacturers of electric car components, especially to the Holy Grail for the electric car … the battery.

Lithium is a major ingredient in the creation of batteries for electric cars but the extraction from the Lithium mines will be at odds with most SRI funds and advisers. For example in our screening process we eliminate the extraction industries which includes mining. This would not eliminate Lithium mining from consideration for socially responsible investors and funds?

Recently we received an update on an upcoming ETF IPO that will focus on the chain of Lithium production: the Global X Lithium ETF which will trade under the symbol LIT.

The top holding in the LIT ETF which will combine a 20% weighting will be Chemical and Mining Company of Chile symbol SQM, a company we ordinarily would avoid for purchase.

The second holding is industrial giant FMC which is a major manufacturer of insecticides, crop production and pest control products and will represent just over 17% of the portfolio composition.

Investing in Exchange Traded Funds can make the investing process a much simpler endeavor. However, the investor or the socially responsible investment professional needs to open up the prospectus and read the fine print relating to the portfolio holdings of the ETF. Just as oil giant BP was held in many ethical mutual funds over the past 20 years investors must be on the lookout for potential conflicts or come to terms with increasing the social screening profile.