Socially Conscious Investing?... Or Nah?
Written by Ben Carter
If you knew investing your money in a business that had questionable or socially irresponsible business practices would net you a major profit, would you put your money in, or pass on principle?
This was the question the City of Portland, Oregon answered when they decided they’d remove WalMart from their city's portfolio of investments last week by selling off the first of their Walmart bonds that had matured. Essentially, Portland sold off a percentage of their stake in Walmart and plans to do so until they no longer hold any stake in the company.
Click here to read the New York Times Story.
There are many things to consider when investing your money for the future. Do you understand the investment? Can you afford to invest and the fees that come with it? What are your goals with investing?
But the City of Portland raised an interesting question that often gets couched when talking about what to do when you invest your money. Are you willing to make money from a company that’s business or business practices are questionable or otherwise not held as socially responsible? Ultimately, Portland decided they had too many concerns over Walmart’s ethics and labor practices.
As a kid, I remember thinking about whether or not I was okay with rocking some fresh Nike’s with the image of a small, Indonesian kid stitching together my shoes in a cramped working space with dim lighting and dirt smeared on their face, somewhere in the back of my mind. I was never sure if that’s how Nike actually made their shoes, but the rumor rang clear enough that, as a kid I at least considered whether or not I was okay buying a pair of shoes that may or may not have been made by a child laborer.
Socially responsible or socially conscious investing is the exact same thing. Oil companies are the easiest example. Every year, oil profits are in the billions and many of those billions are paid out to investors. I have an old roommate who told me his entire, four-year, major-university-that-I-graduated-from education was funded on oil company stocks his parents bought when he was born and then sold when he was college-aged. The question is, are you okay investing in oil companies considering their primary business? Or is profit the only thing that matters?
It’s the difference between investing in ExxonMobil and Tom’s Shoes. It’s Cruella de Vil’s dalmatian business proposition versus Pinocchio's dad’s puppet shop.
There is never really a correct answer. Every person must decide for themselves whether or not they will consider other factors, outside of typical profit motives when investing.
But one thing is for sure. Cruella’s plan to make some extra fly, fur coats was unique and hadn’t to that point, been delivered to the market. She had a money maker, for sure… If you’re passing on investing in her business, you have a strong moral compass and you should be applauded.
Are you someone who cares about socially responsible behavior when investing in companies?