According to some estimates, nearly one in six dollars
managed by investment professionals in the United States
Socially responsible investing (SRI) is a concept several
decades old, but in recent years has attracted more adherents. What is it, exactly?
The precise definition of SRI will vary by investor. To a Christian it may well mean avoiding
companies that profit from gambling, alcohol, or tobacco. To an environmentalist it likely entails
avoiding companies producing fossil fuels or nuclear energy. To a social justice advocate, treatment of
employees or equal opportunity for women and minorities in the workplace will
be factors in determining who is worthy of the investment dollars. And a Muslim-specific fund (there are some)
will have no stake in the financial industry (they don’t believe in charging
interest) or pork products (shunned in their diet). Or perhaps a single issue drives the
investment decision. Would someone not
care at all about fossil fuels but care a great deal
about abortion, one way or the other? Is
there a fund for that person?
It seems to me that at some point an SRI investor must make
some tough choices. Can he find an
investment, for example, that honors both his social justice and his environmental causes?
Let’s take a quick look at one fund, the Vanguard FTSE
Social Index Fund. It screens out the
alcohol/tobacco/pornography companies as well as those involved in nuclear
energy or which have significant revenue from sales to the military. Further, it aims to invest in companies with
workplace diversity and environmental responsibility. According to Vanguard’s website, the fund’s
ten largest holdings include Wells Fargo, Apple, and Facebook.
I appreciate the alcohol/tobacco/pornography filter. But look at those holdings again. Wells Fargo was in the news last year for
fraudulently creating new customer accounts.
Apple got some bad press for how they design their devices’ batteries to
slow down performance after a period of time.
And Facebook? Perhaps you are one
of the 87 million users whose data was mined due to carelessness or just plain
greed of the company and its leadership.
I don’t want to invest in companies that do those sorts of things. Yet there they are in one of the most popular
SRI mutual funds.
But the truth is I do invest in all those companies because
I’m invested in a variety of mutual funds that I picked almost solely based on
past, or expected future, performance. I
am well aware of the availability of "ethical investments", but I’ve not gone
that direction for a couple of reasons.
First, I don’t expect that I could find a fund that
correlated 100% with my unique set of beliefs, whether those beliefs be
religious, environmental, socially just, or patriotic in origin.
Second, how deeply do I or can I delve into each holding
within a mutual fund? Vanguard’s Social Index Fund invests in over four hundred
stocks. Even if every one of those
companies met my ethical and moral values in that they did not profit from
sales of tobacco, etc., how can I be certain that they don’t use their profits to
support, say, abortion? Or political
candidates that vote against my beliefs?
You may disagree with my approach, but I just don’t bother
to even try to invest “ethically”. It
would probably be a losing battle in the end, given the above. I view it much like I do the taxes I
pay. I don’t agree with everything the
government does with taxpayer money, including mine, but I pay the taxes
nonetheless. Likewise, if I declined to
invest in utilities because they use nuclear energy or fossil fuels to generate
electricity, would I be equally circumspect to not power my house with
electricity from such a utility? Good
luck with that.
Maybe you’ll even think I’m lazy for not vetting my
investment options for the ethics of the companies benefiting from my
investment dollars. But my financial
contribution to them is a pittance by comparison to their market value or even
to my value to them as a captive consumer of their goods or services. My concern, your concern, is better directed to being good and
trustworthy citizens, living ethically in our own spheres.
Until next time,
Roger
“And will not God
bring about justice for His chosen ones, who cry out to Him day and night? Will He
keep putting them off? I tell you, He
will see that they get justice, and quickly.
However, when the Son of man comes, will He find faith on the earth?”
Luke 18: 7, 8 NIV®*
*Scripture quotations taken from the Holy Bible, New
International Version® NIV®
Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™
Used by permission.
All rights reserved worldwide.
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