Have you thought about investing ethically?
Ethical investing — usually called socially responsible investing (SRI) — is the application of criteria other than maximizing financial return to one’s investment decisions.
Ethical investing — usually called socially responsible investing (SRI) — is the application of criteria other than maximizing financial return to one’s investment decisions. Its history dates at least to the Pioneer Fund in 1928, formed by evangelical Christians who wished to avoid supporting alcohol and tobacco production. Religious groups cooperated to form the Interfaith Center on Corporate Responsibility (ICCR) in 1971. It both served as a clearinghouse for investor information and encouraged the rise of a tactic closely related to SRI, the morally motivated shareholder resolution. Both tactics were used in the course of the SRI’s most famous campaign: disinvestment in South African companies during the 1980s as a protest against apartheid.
The SRI movement is dominated by what can fairly be called leftist political leanings. This is not to say that there is no overlap between the concerns of mainstream SRI and the concerns of Christian social teaching. The political bias does result, however, in a skewed set of priorities. That this is the case is clear from perusing the writings even of most fervent on the issue. One listing of SRI’s concerns includes torture and kidnapping in South America; forced and child labor in Asia; and environmental degradation around the world.
Notice any glaring omissions? The commercialization of sex through pornography and other forms of entertainment is arguably in some people’s eyes the single most destructive force in Western culture since the 1960s, yet it does not receive a mention from most SRI advocates
I don’t wish to tar the SRI movement as a whole. It is decidedly a good thing that people are thoughtful about the moral implications of their investments and no one has the right to take the moral high ground.
To say this, however, is not to say that every outfit claiming to be “socially responsible” employs a species of moral reasoning about economic affairs that is compatible
with the socially responsible tradition.
Tte Green Century Funds group engages in shareholder activism to prevent drilling for oil in the Arctic National Wildlife Refuge
To put it practically- shifting your IRA money into an SRI account in many cases will not accomplish the goal of conforming to a vision of financial stewardship. For example, the Green Century Funds group engages in shareholder activism to prevent drilling for oil in the Arctic National Wildlife Refuge and to pressure the U.S. Chamber of Commerce to drop its opposition to climate- change legislation — two issues that are, at least, debatable within the parameters of social teaching.
The question of moral responsibility in investing is admittedly a complex one.
Investors should apply the same principles here as in any other kind of moral analysis. Good is to be done and evil avoided.
In the case of mutual-fund investing, one runs up against a serious obstacle: knowledge. Most funds invest in a large number of companies. These companies may each, in turn, possess a number of subsidiaries. An ongoing procession of mergers and acquisitions, which changes the makeup of these companies, further complicates the issue. In sum, it is simply not feasible for the average investor to be able to keep track of whether the companies in a given mutual fund are all “clean” with respect to participation in morally objectionable commerce.
Mutual-fund investing, moreover, implies a certain distance with respect to cooperation in evil. The decision of the investor to place money in a mutual fund is separated from the decision to engage in immoral activity by, at the very least, two or three layers of moral actors.
These considerations suggest that mutual-fund investing will not normally be objectionable. But this should not be taken as a blank slate to ignore the moral analysis changes further when dealing with investing directly in individual corporations: Here the cooperation is more proximate, and so more care is needed.
On the issue of socially responsible investing– as in any moral life in general– there is no substitute for a well-formed conscience.
Some readers may no doubt find such an answer insufficiently concrete — but investing is not the same kind of act as theft or the use of force against the helpless. It involves a host of constantly changing factors and individual circumstances, all of which have a bearing on the moral question. On the issue of socially responsible investing– as in any moral life in general– there is no substitute for a well-formed conscience.