I agree but I’d also add tobacco, gambling, alcohol, some big food (McDonalds, Tyson, Kraft Heinz, Coke) and chemical corporations (Bayer, BASF - glyphosate / pesticides). Everyone’s definition of what’s ethical differs.
I think we all owe it to ourselves to “poke our head above the parapet” and expand our awareness, especially around personal consumption. Where do those items come from? How are they made? What and who is involved.
This shapes your ethics and consequently your investment decisions. If you could buy a slice of the future, what would you want it to look like?
Welcome Ben, great back story. I like to invest in supporting the companies I use and seeking out ethical investments whenever I can. Would be interested to know if anyone has an easier way of identifying their own ethical investments.
Yeah, one of the big challenges with ESG/SRI investing space is that investors’ definitions of ethical can vary widely. And you get these ethical investment frameworks/indices that look at eco and social impact, worker conditions, corp governance etc, but even there you get companies that are good on one dimension but not another. It’s hard wading through it all - in the end I bought some of these as a start (don’t think either are on FT though):
FP Foresight UK Infras Inc A GBP Acc F00000ZLSR.L
FP WHEB Sustainability C GB00B8HPRW47.L
Been using it for around 1yr now. Tbh I rarely switch to Google, perhaps for less than a handful of searches per month. They’re transparent with their financials too and how much is spent on replanting projects around the World.
I think that ethical investing is a very tricky subject as it is highly subjective and is just an endless spiral.
For an investor who thinks gambling is unethical, would that exclude them from buying uk gilts because of the state ownership of the lottery? Even though 25% of lottery revenue goes towards a fund that provide grants to good causes?
For those opposed to the petrochemical industry, are all companies equal? e.g Royal Dutch Shell develops and invests in renewables vs Sinopec which does not.
What about state bonds for those who think that state imposed taxation is theft or are opposed to the concept of the nation state? What about companies that receive taxpayers money in some form?
For those against abortion, what about medical companies that provide supplies or services to abortion providers?
Medical companies make plastic syringes that are bought and used to administer heroin which then kills people… and the syringes are not eco friendly. Does that mean all companies in the syringe making supply chain are unethical and complicit in the deaths relating from the use of their products or services?
Would a company be seen as unethical if a ceo, owner or even employee did something perceived as unethical even if if wasn’t directly related to the company?
What about companies that operate in countries with the death penalty, no environmental regulation, laws against homosexuality, laws targeting women, state surveillance, poor human rights records etc…
When it comes to ethical funds it gets even trickier as unethical companies are those the manager of the fund considers them to be.
I really think “ethical investing” is just a hyped up buzzword targeted at middle class millennials.
11:FS’s Simon Taylor wrote an interesting blog post about this recently. He argued that companies should be measured based on their impact -
Let’s take an oil producer who buys lots of carbon credits. Or a tobacco company who spends a lot of profit on charity initiatives. A plastic producer who is carbon neutral. All of these companies can score well on many “ESG” measures.
Impact is more than carbon offsetting for your evil.
Impact is about what a company produces. If a company produces oil, it doesn’t matter how many carbon credits they buy, their impact on CO2 emissions is negative. If a company produces biodegradable drinks straws but doesn’t yet donate massive amounts to charity, their impact is still positive.
The FT’s arguing that ethical investing & making money are in conflict here -
I’ve just seen a nice (although quite corporate) counterpoint from someone at a16z (one of Silicon Valley’s biggest VCs) though -
customers who care about social responsibility can not only leave, but can influence corporate behavior in the same way that customers who request or desire new features or service offerings do. And it’s the job of the board and the executive team to respond to this broad array of customer demands and prioritize them appropriately. Failing to do so will mean the end of the corporation and the destruction of shareholder value. In this way, responding appropriately (and proportionally) to customer needs drive long-term growth, profitability, and shareholder value. Everyone wins.
There is a biting point where you have to be earnings focused as there’s a business to run but also exploring if there is growth opportunity in demonstrating that you as a business care about other factors. Which I think there is. There’ll always be scenarios were people may not care, but there’s definitely a growing interest in people not wanting to financially support obvious negative causes.
Lots of companies are exploring the triple bottom line - People, Planet, Profit.
Speaking of which - when are you getting some SRI ETF’s or stocks on the platform lol?