The Difference Between Socially and Morally Responsible Investing

The list of concerns promoted by most ethical investment funds is long and not especially coherent.
by Samuel Gregg | Source: SpireStocks.com
The funds generally refrain, for example, from investing in businesses directly (and sometimes indirectly) involved in armaments, tobacco, gambling, pornography, product-testing involving animal experimentation, inhumane farming, nuclear fission, mining, and countries with oppressive regimes. The same funds also often try to avoid investing in corporations that do not have affirmative action programs. Equally reprehensible, according to many socially responsible investment guidelines are corporations insufficiently committed to community involvement.

This raises some problems. What, for example, constitutes "sufficient" community involvement? And is manufacturing armaments wrong in itself? Weapons can be used, as we know, to defend victims of military aggression.

The standard list of ethical investment concerns also suggests that many of these "socially responsible" criteria have more to do with fashionable causes than with the objective moral life. Apart from pornography, the list reflects little interest in questions of sexual morality. Ethical investment funds rarely cater to those who believe that marriage is a basic good, that abortion is wrong, and that promoting the gay "lifestyle" amounts to formal cooperation in evil.

In short, a high degree of moral selectivity is apparent in these organizations. Political selectivity is also evident. Many of the ethical investment criteria also reflect an unreasonably narrow judgmental scope. Few would consider racial discrimination good. But you do not have to be a racist to object to affirmative action programs. Many perfectly orthodox Catholic thinkers have carefully argued that affirmative action policies are, in fact, unethical because they actually violate principles of justice. It is therefore highly contentious to imply that a corporation that does not engage in affirmative action is acting unethically.

This phenomenon is not limited to the business world. Individual and institutional investors regularly hear themselves exhorted to invest "ethically" or in a "socially responsible" manner. Not coincidentally, these terms have accompanied an expansion of what are called "socially responsible" or "ethical" investment funds. Proponents of these funds claim that they allow people to invest in businesses that are "ethical"-that is, in businesses that avoid certain types of activity while rigorously promoting others.

There is also a tendency for so-called socially responsible funds to use the words "ethical" and "environmental" interchangeably. Apart from the obvious problem of automatically associating morality with the claims of anyone describing himself as an environmentalist, there is surely room for prudential judgment here. A genuine ethical question, for example, arises over the use of animals for testing various products. But should we test these products on humans instead? Or let people use the products without testing them at all?

Even more questionable is the fact that some ethical investment groups list "disclosure of information" to the groups themselves as a moral criterion against which corporations should be assessed. There are many good moral reasons why a corporation may choose not to disclose such information, such as its preexisting duties to maintain confidences. Corporations may also think that the survey questions on disclosure forms are poorly framed, that their underlying assumptions are unsubstantiated, or that the ethical categories chosen have more to do with fashionable causes than morality. In such instances, it may even be unethical to respond to such surveys. Whatever the circumstances, labeling a company as unethical because it refuses to complete an unsolicited form is clearly questionable.

Thus, investing in so-called socially responsible funds is no guarantee that the investment is moral. Many such funds promote a somewhat crude, sometimes inadequate, and often erroneous understanding of morality. Naturally, if people want to further particular causes through encouraging us to invest in particular ways, there is nothing to prevent them from doing so. But one may protest their use of the word "ethical" to describe such investments.



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Published by: Jay Peroni
Date: 2009-01-01 10:00:00
There is continued confusion pertaining to the difference between socially responsible investing and faith-based investing. As Christians, we should be encouraging socially responsible investing, but more focused on "faith-based in¬vesting," which is investing that avoids companies whose activities are intrinsically evil, meaning the activities are always immoral, regardless of the circumstances or culture, as revealed by God through time. For example, abortion, the murdering of the innocent, is always wrong and immoral even if it is legally permissible within a society. "Socially responsible investing," on the other hand, is investing that avoids companies whose activities are not considered socially responsible, and tends to correlate the important issues of a time period or a current fad. For example, though certain activities that can cause damage to or are not conducive to preserving the environment may not be socially responsible, such activities are not intrinsically evil or immoral. Jay Peroni, CFP Author of The Faith-Based Millionaire www.jayperoni.com

Published by: Jay Peroni
Date: 2009-01-01 10:00:00
There is continued confusion pertaining to the difference between socially responsible investing and faith-based investing. As Christians, we should be encouraging socially responsible investing, but more focused on "faith-based in¬vesting," which is investing that avoids companies whose activities are intrinsically evil, meaning the activities are always immoral, regardless of the circumstances or culture, as revealed by God through time. For example, abortion, the murdering of the innocent, is always wrong and immoral even if it is legally permissible within a society. "Socially responsible investing," on the other hand, is investing that avoids companies whose activities are not considered socially responsible, and tends to correlate the important issues of a time period or a current fad. For example, though certain activities that can cause damage to or are not conducive to preserving the environment may not be socially responsible, such activities are not intrinsically evil or immoral. Jay Peroni, CFP Author of The Faith-Based Millionaire www.jayperoni.com

Published by: Jay Peroni
Date: 2009-01-01 10:00:00
There is continued confusion pertaining to the difference between socially responsible investing and faith-based investing. As Christians, we should be encouraging socially responsible investing, but more focused on "faith-based in¬vesting," which is investing that avoids companies whose activities are intrinsically evil, meaning the activities are always immoral, regardless of the circumstances or culture, as revealed by God through time. For example, abortion, the murdering of the innocent, is always wrong and immoral even if it is legally permissible within a society. "Socially responsible investing," on the other hand, is investing that avoids companies whose activities are not considered socially responsible, and tends to correlate the important issues of a time period or a current fad. For example, though certain activities that can cause damage to or are not conducive to preserving the environment may not be socially responsible, such activities are not intrinsically evil or immoral. Jay Peroni, CFP Author of The Faith-Based Millionaire www.jayperoni.com

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