Ethical Investments - The New Investment Option|
by Danca Risamio
Anyone doing a financial course 10 years ago may not have
encountered the concept of ethical investing. However, it
is an are that is growing and many suspect that it will
feature widely in investments of the 21st century.
The question of ethics is a subject that has been debated
by philosophers since the modern world began. It is a
controversial area since it is all about how individuals
and societies make the choices they do and how they live
their lives. When it comes to ethical investments then it
is sufficient to say that individuals have distinct ethical
The emergence of ethical investment as an investment option
has surfaced due to people becoming more aware about
investment in general. Most investors a decade or so ago
would employ a special financial advisor to invest money on
their behalf and to make their choices for them.
The money, from an investor standpoint, went into a black
box. There was no concern about what the money was doing in
the fund - so long as the return was good most investors
did not concern themselves with where it was being
This approach has caused problems for some. For instance
the Church of England found itself denouncing land mines
whilst the investment portfolio it held was pumping money
into the companies making the mines! It is easy to see how
this happened - the hierarchy of the Church, being
professional priests, gave the investment duties to
professional investors... Nowadays however, we see the
General Synod of the C of E looking over their investments
Individuals have the same issues. Take the example of a no-
smoking advocate - someone who berates friends and family
who smoke, tries to get them to stop. Does it matter if his
finances include investment in cigarette companies, even as
part of a portfolio??
Many people are beginning to think it does matter, and
starting to ask what exactly their money is financing. One
result is that people are taking more interest in the exact
nature of their investments. Another result is the rise of
companies that will invest money ethically.
Of course what is considered ethical is a personal thing.
Some people may think of investment A as unethical whilst
others feel that it is perfectly OK. For example we can
look at a company that produces and sells weapons. Some may
not mind investing in these companies if they think that it
is the governments role to regulate the making and use of
weapons rather than down to the individual. Others may
choose to put their money somewhere else (although a
surprising number of companies are linked with weapon
Another thorny issue is the company that uses very cheap
labor in other countries. How do you read this? Is the
company exploiting children or is it simply letting
capitalism work? In other words does any job in a poor
nation convey an opportunity or are these jobs withdrawing
chances by keeping kids from school? A North American
concern that shift production... is this taking jobs from
US citizens or helping the nation compete and helping
There is no doubt that questions about ethics are
complicated, but many people now want to start grappling
with them. And although each small investor may not make
much difference, added together they could present a
problem for a company. If a lot of small investors choose
not to invest in a particular company it could give them a
clear message that their activities are not compatible with
the ethics of society - they may change their ways!
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