In my post last week I
addressed how lack of transparency in the corporate world (and not just the
American corporate world) challenges the ability to invest according to one’s
values. I used environmentalism as an
example. But the challenge applies to
anyone seeking to invest according to whatever values he holds.
As a Christian myself, let me
use that as a starting point to illustrate.
There are a number of brokers that tout their Christian-oriented
investments. They generally steer clear
of investing in companies which profit from the sale of alcohol, tobacco,
firearms, “adult entertainment”, and gambling services. When I checked a few of these funds I found
large energy companies (hydrocarbons) and mining companies among the largest
holdings. For someone who is a Christian
and also cares about the environment, this would be a problem. One of the companies heralded it plans to
reduce emissions 99% by 2030 (sound familiar?).
It was also in the news for having to pay a $12 million fine to a state
environmental agency for pollution it caused.
But if environmentalism is not
this Christian investor’s priority, would he then be okay investing in these
funds? Well, how about the presence in
the fund’s top holdings of a company that supports the intelligence community
and its sometimes deadly activities?
It’s there. As is a company that
manufactures microchips that can be used in lethal, high-tech weapons and slot
machines. Or if this conscientious investor wants absolutely nothing to do with
alcohol or companies that profit from it, would he object to Costco (a large
purveyor of wines) being among the top holdings (which it is)?
Mutual funds generally hold
the stocks and bonds of dozens or even hundreds of companies, so even a top-10
holding in their portfolios may only comprise one to two percent of the money
invested by that fund. So if I have
$10,000 invested in a fund that has total assets of $150 billion dollars, my
investment represents only 0.000000066 of that fund which might invest only 1%
in a company on my naughty list. It’s so
small as to be insignificant.
But this assumes an investor
can actually identify the bad players he wants to avoid supporting. At one time Altria owned Kraft Foods. Altria is best known for owning the large
tobacco company, Phillip Morris. Did you
boycott Kraft Mac n’ Cheese while Kraft was owned by Altria? Did you then rejoice and put it back on your
shopping list when Altria divested from Kraft?
Do you have a buy/no-buy list of brands when you go shopping? Good luck keeping it up to date. Just look up the history of some of the
largest American brands and see how often they change hands or purchase and
sell and merge with other companies. It
would be a fulltime job to track it all in the interest of keeping your
portfolio “pure”.
Let’s take it farther. How about the $10,000 held in a certificate
of deposit at the local bank? The bank
uses money on deposit to lend to individuals and businesses. Should I be questioning the bank whether they
helped fund the new tobacco and vape shop down the road? Depending on the bank’s assets and the size
of the loan, I might have inadvertently contributed a great deal more than
0.000000066 to that distasteful enterprise by virtue of my money being held by
the bank.
Moreover, many companies make
political or charitable contributions that I may find objectionable. Do I vet every company in a mutual fund along
that criterion? Some companies even
hedge their bets politically and contribute to both political parties. What do I do with that?
My point is that this world is
interconnected. I don’t drink alcohol or
want to encourage drinking by others, but I shop at grocery stores that sell it. I don’t approve of one national retail
chain’s approach to alternate lifestyles, but I still patronize that chain,
because they often have very good sales.
Should I spend more money to shop elsewhere? Though I infrequently go to a movie, will I
stop doing that because next week that theater may be showing an “R” rated film
that I cannot condone and would not view?
Should I put my money under my bed instead of at the bank so I don’t end
up indirectly supporting a business I find objectionable? Should I pore over the financial reports of
every company of which I own a minute share by virtue of my 401(k) account
investments, to be certain they don’t cross my dearly held beliefs? That would require quite an investment of
time. And can I trust even a Christian-oriented
brokerage firm to offer me only investments in companies that not only don’t
sell alcohol, tobacco, etc. but are not critical suppliers to those who do and
which do not violate other values I hold that are not specifically “Christian”?
Some groups of investors take
an activist approach to their value-based investing, buying stock (which is,
after all, an ownership stake) in companies that violate the investors’ principles
but with the intent to use that ownership to effect positive change in the
company. At one of my recent jobs, my
employer was about to take what I considered an unethical stand in regard to a
client. I was about 24 hours away from
turning in my resignation over it. But
then my son reminded me of this principle, that I might disagree with some
things my employer did but if I were to resign then I would not be there to mitigate
the damage from this one action by the employer, help prevent future bad
actions, or be there to advocate for clients who might suffer from those
actions. (In the end, the employer reversed
course and did not take the action against which I was protesting.)
So while I don’t patronize
vape shops, buy and consume alcohol, or work at a casino, I choose NOT to seek
out only investments that meet my specific value system. I don’t object to principled individuals trying
to do so, and I respect their right to disagree with me. But for me, the task requires too much time
to research and in the end would probably prove futile.
Until next time,
Roger
“I wrote to you in my letter not to associate
with sexually immoral people—not at all meaning the people of this world who
are immoral, or the greedy and swindlers, or idolaters. In that case you would have to leave this
world.” I Corinthians 5: 9-11 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.
No comments:
Post a Comment