Monday 24th October 2016                 Change text size:

There is such a thing as an unethical investment

Photo: Rachel Chapman via Flickr

The Telegraph’s Questor column leapt onto the Wonga bandwagon on Friday, boldly and unsubstantiatedly declaring, “There is no such thing as an ethical investment.” There is certainly such a thing as an unethical investment.

The debate around ethical investment is often framed in terms of the poor performance of ethical funds (a myth); that they are a ‘marketing trick’ (nonsense); or that unsavoury companies that can appear in an ethical fund.

The founding principles of negative screening that constituted ethical investment, screening out or limiting investment in pornography, gambling, tobacco, alcohol, arms and nuclear, have meant that companies with dubious human rights records – oil, gas and mining companies, for example – are allowed in. This is a recognised issue for the industry.

Click here to read The Guide to Sustainable Investment 2013

While this is obviously questionable, the arguments around what is ethical have evolved. The narrow argument on ethical funds fails to recognise the emergence of sustainable, SRI, responsible and impact funds that use positive selection to actively seek out companies involved in sustainability.

The classic line, “To ignore firms with potentially ethical concerns may mean your investments would not grow substantially”, will be familiar to our readers. The same defence was used to support the slave trade. To ignore firms that invest in slaves meant that 19th century abolitionists’ investments would not grow substantially as those that did.

But the statement that there is no such thing as an ethical investment misses the point. It is more accurate to say that there is such a thing as an unethical investment.

In the movie Aliens, profiteer and company man Burke decides to smuggle the alien embryos back to Earth inside Ripley and the orphan Newt. They will be valuable to the bioweapons division of the company. To succeed, he needs to sabotage the surviving marines’ life support. When this plot is uncovered, Ripley says to Burke, “I don’t know which species is worse [alien or human]. You don’t see [aliens] fucking each other over for a god damn percentage.”

I think we can all agree that Burke was unethical. Doubtless his actions would be applauded in the Questor column, had he pulled it off and delivered a healthy return to the company’s investors.

Because that is what the vast majority of funds are doing: fucking over the environment and our children for a god damn percentage.

It is manifestly unethical to knowingly profit from other people’s misery and suffering – especially that of children. It is unethical to profit from degrading the life of future generations. It is unethical to consume and waste finite resources unsustainably.

– Investing in and profiting from drinks companies that know their advertising appeals (and is designed to appeal) to underage drinkers is unethical

– Investing in and profiting from tobacco firms that market their products in countries with no public health education or adequate health system is unethical

– Investing in and profiting from gambling firms that target areas of high deprivation (and desperation) – ditto high interest rate lending firms – is unethical

– Investing in and profiting from adult entertainment where the age and consent of the individuals involved isn’t known is unethical

– Investing in and profiting from arms companies that sell weapons to oppressive regimes and aggressor states is unethical (we thought we knew Iraq had weapons of mass destruction because we had the receipts)

– Investing in and profiting from oil, gas and mining companies that behave recklessly towards the environment and people is unethical

– Investing in and profiting from nuclear divides opinions – but civilian nuclear power creates the risks of proliferation and the challenges of radioactive waste disposal

– Investing in and profiting from pharmaceutical companies that hide unfavourable test results is unethical

– Investing in and profiting from media companies that hack the phones of murdered school children, families of killed war heroes and victims of terrorism is unethical

– Investing in and profiting from any company that knowingly harms the planet and its people, secretly lobbies government to protect its interests and sponsors disinformation campaigns is unethical

So while it is time consuming to find an ethical fund, a simple step in the right direction is to avoid the most unethical ones.

There is a group think at play in investment, and the archbishop of Canterbury has succumbed to its charms. Ethical and sustainable is hard to do. It means making hard choices and forgoing an easy profit. It means transforming investment and changing the mindset and culture of investors. It means taking on powerful vested interests in business, finance, politics and the media.

It means accepting there is such a thing as an unethical investment – they are the ones that fuck us all over, for a god damn percentage. Pretending it’s all just a little bit complicated, so we need not act, is as ignorant and lazy as it is unethical.

Further reading:

For a church, fiduciary responsibility should not trump social responsibility

Is a little sin tolerable? Ethical investment and searching for the good

Wonga, the archbishop and the Ethical Investment Advisory Group: interview

Archbishop ‘embarrassed’ at Church of England investment in Wonga backer

The Guide to Sustainable Investment 2013

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