Ethical Investing

At school, we were taught a weed is a plant that’s out of place in the mind of a human.

e.g. a rose in a wheat field is a weed even though it’s not a noxious plant.

Ethical investing is the same.

Two years ago, a good friend of mine knocked back a seat on a charity board because she was incensed by their female quota.

She would have been the perfect fit too. Impressive CV, highly intelligent and dripping with integrity.

“Why can’t women be appointed on merit alone?” she argued

“Why can’t you just accept the seat and prove them wrong?” her husband rebutted.

She eventually declined the offer based on her principles.

Now consider Ellon Musk. One of the greatest visionaries of our time.

Tesla is a brilliantly built car which shot to fame as an environmentally friendly vehicle.

However, whilst Ellon Musk might be a crusader for the environment, he pays his staff below the award wage and consequently, is always fighting the unions.

(Note – Tesla also remunerates their staff with Tesla stock but what happens when the share price tanks, as has been the case recently?)

Further, Musk is not big on compliance either, hence his on-going battles with the US Securities and Exchange Commission.

And then there’s the technology sector…

Big tech is algorithm driven and therefore free of human bias, supposedly.

But how do you remove bias, discrimination, and any conflicts of interest from an algorithm when the original algorithm was written by a human?

Machine learning can only do so much.

And then there’s the trade-off between freedom and protection. We want the best tech to enable faster access to more data, while we simultaneously demand our own footprints and privacy remain protected and confidential.

In a recent survey by Morningstar, 87% of respondents said they’re seeking more ethically focused investments. Specifically – environmental, social and governance focused investments (ESG).

But what is ethical investing?

And how do you determine if one person’s ethics are more virtuous or right than someone else’s?

For example…

Was it right of my friend to refuse a board seat because she doesn’t agree with gender quotas?

And is it right of Ellon Musk to champion the environment ahead of employee’s wages and corporate governance?

And who’s moral compass polices the hazardous intersection between freedom of information and protection?

If doing the right thing was so easy, we’d never do the wrong thing.

The difficulty is that not only is it hard to know what’s morally and ethically correct, it’s even harder to know what those terms actually mean.

Think about it. How do you define ethically correct? And where do the right ethics come from anyway?

Is it home, school, church, tinder…where?

Because what’s right for you may seem very wrong to someone else (and vice versa).

And even more confusingly, we could agree on what we think is ‘right’ yet still be wrong.

What a minefield!

Ethical investing is a boom sector.

But ethics are a matter of perception which means they will always be determined by our own hierarchy of values.

Roses or wheat?

Have a great weekend!

Adam

Back paddock – it’s not what you say, its what other people hear