What has "Ethical Investment" to do with Ethics?
		Contents Preface and Summary Article: What has "Ethical Investment" to do with Ethics? What is ethical investment? Who is involved in Ethical Investment and what do they do? What products and practices are defined as ethical? The way some Ethical Investors trade on the word 'ethical' Can products be morally good or evil? The case of armaments Ethical investment as pre-empting true moral argument Other ethical traditions and EI The environmental anathema: no limits to scrupulosity Is EI use of questionnaires ethical? Conclusion: ethical investment and the lesser of evils The contributors About the Social Affairs Unit Appendices Preface and Summary There is a number of investors who require not only that their investments are profitable but that they meet other non-economic criteria. The investor may disapprove of drinking or the arms trade or be enthusiastically in favor of more women in the boardroom. He wishes to be assured that his personal pension plan or whatever is invested in companies which have no dealings with the products he disapproves of and follow the policies of which he does approve. Various investment companies now provide such policies which are conventionally known as "ethical investments". This Report is in favour of financial institutions meeting customers' demands and therefore applauds this development. Moreover it applauds the principle that investors should examine the ethics of their investments. Peter E Hodgson writes, 'The idea is good. We should try not to support companies engaged in unethical activities'. He and others were responding to an invitation from the SAU to consider current ethical investments. However, what they found was that principles are one thing, practice another. To quote Hodgson again: In practice, the way some of these [people] work is quite alarming. To be ethical and effective, such work needs to be based on the most careful research, and the approach to companies should be constructive. The list of companies is undiscriminating and one would want to draw distinctions for each of them. Who are these people to say that I should not have a glass of wine or a gamble if I wish? Why is South Africa (as it was) listed as the most unethical regime? What about Burma, Libya. China? "Involvement in nuclear industry" implies that the nuclear industry is totally bad, which is absurd. What about the use of nuclear radiation in medicine? Or nuclear reactors for civil power, arguably the least destructive power source in relation to the environment. Other commentators such as Roger Scruton and Anthony O'Hear follow the same theme. Some of what is called ethical investment is not very good ethics, indeed in its crude distinctions it does not encourage refined ethical judgment at all. And some of it has little to do with ethics. This is partly because of its reliance on divisions into allegedly good and bad products whereas ethics is about careful judgments on what people do with products. Thus arms can be used to defend just causes and innocent persons under attack as well as aggressively. It is also partly because the criteria of the ethical investment industry have little to do with traditional ethical concerns about for instance sloth or sexual immorality and much more to do with current fashionable causes such as deforestation or smoking. They are very concerned with. e.g., the employment rights of ethnic minorities but apparently little concerned with, e.g., distinguishing firms which justly reward hard workers much more than slackers from firms which unjustly operate low differentials. Several commentators speak of the selectivity involved. What is the principle on which certain "unethical" products or practices are selected for listing and certain others ignored? One answer, which the commentators acknowledge, is that the criteria reflect the criteria demanded by investors. If so, well and good. The investments these companies favor indeed satisfied a customer demand. But that does not mean that what they are doing has a right to be labeled "ethical" with the at least occasional implication that other investments are unethical. "Ethical" investors attach much importance to the truthful and accurate disclosure and labeling of business practices and products. This Report suggests that their own investments might variously be more accurately labeled "investments reflecting investors' opinions", "investments reflecting fashionable causes", "scrupulous investments", "ethically simplistic investments", or a range of others. The one term, which prejudges the issues and which is not justified is "ethical". What has ethical investment to do with ethics? Not much. This study involved the SAU Director writing in a personal capacity. Its views do not reflect the views of the Unit and its Trustees. Other commentators are responsible for such comments as are quoted from them. Digby Anderson 1996 Article: What has "Ethical Investment" to do with ethics?
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