Love this question, as i’ve thought about it myself at length.
I’ve always felt that ‘ethics’ is so dependent on the individual investor. For example, I would agree with OP that oil stocks are unethical (climate change,etc), but I personally have no issue with alcohol stocks - no denying the damage alcohlism wreaks in people’s lives, but I do feel it’s up to the individual (and more broadly, regulators) to consume responsibly. I’m aware others will disagree with me, we’re all different.
It gets even more complicated than this though, what if an otherwise unethical company is poised well for the future (e.g. low/no alcohol products from alcohol stocks, or the oil companies that invest heavily in renewables?)? I could go on.
I often wonder to myself whether if one goes overboard with ethics in investment, that they might soon run out of companies to invest in; every business will collect skeletons in their closet in their quest for profits. That’s capitalism imo. I can say a bad word of every one of my holdings, but on the whole, I am content with their ethical standards.
That being said, I genuinely believe is that consumers are so ethically focussed that being responsible/ethical will eventually be a necessity when it comes to surviving as a business. I think unethical businesses will have to adapt, or die out. I see signs of this already in several industries (e.g. plant based meat, electric vehicles, low/no alcohol brands), and it’s great to see.