4 ms·

Can you ethically invest in unethical companies?

14 points by cwan 16y ago

wazoox 16y ago
Tldr: according to the article, the answer is a resounding "no".
Mz 16y ago
Yeah, unemployment and zero services. That's the way to make the world a better place. Mz, who owns no stocks at all because nothing is good enough for my picky ethical standards. Has nothing to do with lack of funds. I swear! It's solely because of my Lawful Awful alignment 1 orientation. (oops, I have nearly $50 in a retirement account invested in stocks -- need to divest myself of that)
maxharris 16y ago
No, you can't ethically invest in an unethical company. However, you still need to answer the question: what is ethical? Next, if you have an answer, how do you know it? Don't forget to follow Mrs. Rand's immortal adage: check your premises.
- billybob 16y ago
  Also, you need to answer the question, "what if I don't really exist?"
  - fleitz 16y ago
    If you don't then the answer is moot
  - maxharris 16y ago
    You cannot answer that question with "I don't" or even "I don't know" because existence is axiomatic. Any answer you give to this question (or any other) subsumes existence, consciousness and identity. So the only answer is "I exist, I know that I do, and all things are what they are, so I am what I am."
zck 16y ago
While accompanying my father to his financial advisor, I had the opportunity to decide what to do with some funds I had inherited. The advisor had given me several prospectuses to look over, and I had ruled out some funds because they had Altria (the former Philip Morris) as one of their largest ten holdings. I told him of my choices, and he laughed, saying that there was no way to get away from such companies. Quite sad, but that's reality.
- BrandonM 16y ago
  Everyone else doing it doesn't make it right.
deleted 16y ago
[deleted]
jerf 16y ago
Interesting follow up question that I have no particular answer to: If you accept that it is unethical to invest in companies that are behaving in a manner you believe is unethical, is it ethical to short them?
rbanffy 16y ago
There is one situation when you can ethically invest in an unethical company - to use your investor power to change their behavior. Most probably that's not easy unless you happen to have a couple billions lying around (or a particularly undervalued unethical company at hand).
julius_geezer 16y ago
If you can find a copy of Murray Kempton's _Rebellions, Perversities, and Main Events_, there is an essay "The Confusions of Conscience" about just this. (I mention this mainly because the book is well worth having--the man had a way with a sentence.)
blahblahblah 16y ago
A bit part of the problem is that you don't get to vote the shares held by your mutual funds. The fund manager gets those votes and he/she is obligated to vote solely on the basis of profit motive. And because of 401(k) and 403(b), the vast majority of the workforce is at least partially invested in mutual funds. Most employer-based retirement plans do not offer the option to invest in individual stocks.
- Nick_C 16y ago
  Here in Australia employers have to offer several choices of investment plans for superannuation, and ethical mutual funds have sprung up as a result. You can pretty much invest ethically if you want. You're still stuck with the problem that you don't get to define what "ethical" means though, you usually have to accept the mutual fund manager's definition. The other problem with ethical investing in a constrained universe of stocks is whether you are inadvertently increasing risk (i.e. price variance to benchmark) by the selection constraint. I'm not up with the latest research, but by the early 2000s there were sufficient ethical funds in the U.S. to pretty much ameliorate that risk and I'd be surprised if it was a real factor today for the U.S. (I don't have the latest data for Australia.)
srw 16y ago
for me the question is: how do you know if the company is unethical? it's because the news? in the intimate of every company we can see unethical behaviour.
lionhearted 16y ago
I won't in a company I don't want to succeed. I don't want to have conflicted motives about wanting to see an organization succeed or fail. But that's pragmatism more than ethics - I don't want to be in a position where, say, advocating publicly that smoking is bad makes me lose money on tobacco shares.

14 points by cwan 16y ago

Tldr: according to the article, the answer is a resounding "no".

Mz 16y ago

Yeah, unemployment and zero services. That's the way to make the world a better place. Mz, who owns no stocks at all because nothing is good enough for my picky ethical standards. Has nothing to do with lack of funds. I swear! It's solely because of my Lawful Awful alignment 1 orientation. (oops, I have nearly $50 in a retirement account invested in stocks -- need to divest myself of that)

maxharris 16y ago

No, you can't ethically invest in an unethical company. However, you still need to answer the question: what is ethical? Next, if you have an answer, how do you know it? Don't forget to follow Mrs. Rand's immortal adage: check your premises.

billybob 16y ago
Also, you need to answer the question, "what if I don't really exist?"
- fleitz 16y ago
  If you don't then the answer is moot
- maxharris 16y ago
  You cannot answer that question with "I don't" or even "I don't know" because existence is axiomatic. Any answer you give to this question (or any other) subsumes existence, consciousness and identity. So the only answer is "I exist, I know that I do, and all things are what they are, so I am what I am."

zck 16y ago

While accompanying my father to his financial advisor, I had the opportunity to decide what to do with some funds I had inherited. The advisor had given me several prospectuses to look over, and I had ruled out some funds because they had Altria (the former Philip Morris) as one of their largest ten holdings. I told him of my choices, and he laughed, saying that there was no way to get away from such companies. Quite sad, but that's reality.

BrandonM 16y ago
Everyone else doing it doesn't make it right.

deleted 16y ago

[deleted]

jerf 16y ago

Interesting follow up question that I have no particular answer to: If you accept that it is unethical to invest in companies that are behaving in a manner you believe is unethical, is it ethical to short them?

rbanffy 16y ago

There is one situation when you can ethically invest in an unethical company - to use your investor power to change their behavior. Most probably that's not easy unless you happen to have a couple billions lying around (or a particularly undervalued unethical company at hand).

julius_geezer 16y ago

If you can find a copy of Murray Kempton's _Rebellions, Perversities, and Main Events_, there is an essay "The Confusions of Conscience" about just this. (I mention this mainly because the book is well worth having--the man had a way with a sentence.)

blahblahblah 16y ago

A bit part of the problem is that you don't get to vote the shares held by your mutual funds. The fund manager gets those votes and he/she is obligated to vote solely on the basis of profit motive. And because of 401(k) and 403(b), the vast majority of the workforce is at least partially invested in mutual funds. Most employer-based retirement plans do not offer the option to invest in individual stocks.

Nick_C 16y ago
Here in Australia employers have to offer several choices of investment plans for superannuation, and ethical mutual funds have sprung up as a result. You can pretty much invest ethically if you want. You're still stuck with the problem that you don't get to define what "ethical" means though, you usually have to accept the mutual fund manager's definition. The other problem with ethical investing in a constrained universe of stocks is whether you are inadvertently increasing risk (i.e. price variance to benchmark) by the selection constraint. I'm not up with the latest research, but by the early 2000s there were sufficient ethical funds in the U.S. to pretty much ameliorate that risk and I'd be surprised if it was a real factor today for the U.S. (I don't have the latest data for Australia.)

srw 16y ago

for me the question is: how do you know if the company is unethical? it's because the news? in the intimate of every company we can see unethical behaviour.

lionhearted 16y ago

I won't in a company I don't want to succeed. I don't want to have conflicted motives about wanting to see an organization succeed or fail. But that's pragmatism more than ethics - I don't want to be in a position where, say, advocating publicly that smoking is bad makes me lose money on tobacco shares.