Ethical investing

Thrugelmir

RG2015 said:

Thrugelmir said:

RG2015 said:

Old_Lifer said:

Being  'ethical'  can  boost the  bottom line,  as an ethical product can often be sold at a higher price.

The problem is the length of time it can take to achieve that level of accreditation.

The issue is whether investors, or consumers are willing to pay part of the increased costs by accepting higher prices or lower returns.

As long as people want the biggest piece of the cake for themselves rather than thinking along more equitable lines. Then greed will continue to dominate thinking.  

You don’t have to be Bill and Melinda rich to abandon profit maximisation as a driver and embrace altruism or any other non financial goal.

Icons need the spotlight. It's addictive to them. Part of the culture of American Exceptionalism where it's a race to the top while treading on everyone else to get there. 

thegentleway

Type_45 said:

thegentleway said:

I don’t think there is anything intrinsically wrong with making a profit. Quite the opposite, I would say profits are important to make businesses sustainable. 

Sustainable in this context means tax payer subsidized. Ie, crony capitalism.

I'm talking about business that thrive on free entreprise and produce goods/services that improve wellbeing/quality of life/add value. It's good for them to make profit so they can continue their activities. Seems fairly obvious that crony capitalism is unethical.

Old_Lifer said:

My wife wanted me to get some  fair trade bananas the other day.   I could have bought ordinary bananas at around half the cost. Fair trade and organic produce are sold at  higher prices.  Only part of this is profit.  There is a cost in treating the workforce fairly.

I'm skeptical fairtrade's benefits. I suspect it's much better to buy cheap bananas and donate the difference to effective charities who addres the underlying causes of poverty.

Linton said:

When you buy a share other than directly from a share offering none of your money goes to the company concerend.  You are merely buying the share from someone else who may or may not have directly invested in the company and selling to someone who certainly hasnt done so.

So not investing in an unethical company makes no difference to the world, though it may make you feel more virtuous.

That's not how supply and demand works. Every potential investor that refuses to invest in unethical companies, reduces the demand and therefore the share price.

Thrugelmir

Lowering the share price doesn't make the companies any less profitable. There'll always be investors who'll buy when a price is genuinely cheap. Last year I was buying Total on a 11% yield. No one liked oil companies it seemed as considered dinosaurs. Yet investors were happy to pay a huge premium to invest in what was the Danish Oil and Gas Company which has transformed itself into Orsted.  Total is following a similar path and will be a far bigger renewable energy player than Orsted in the future. 

thegentleway

It doesn’t directly make them less profitable no. To do that in this example you would have to reduce your consumption of fossil fuels, change laws/taxation etc...

But it doesn’t detract from the fact that ethical investing can drive positive change in society and has the ability to push companies to change and adopt more ethical practices.

Linton

thegentleway said:

It doesn’t directly make them less profitable no. To do that in this example you would have to reduce your consumption of fossil fuels, change laws/taxation etc...

But it doesn’t detract from the fact that ethical investing can drive positive change in society and has the ability to push companies to change and adopt more ethical practices.

Yes, but the way ethical investing has worked most effectively has been for activist investors to buy shares in a company which gives them a base from which to question and change its policies.

Not-investing in a company to change its policies seems a pretty futile thing to do - after all you are probably not-invested in most of the companies in the world. 

thegentleway

Linton said:

thegentleway said:

It doesn’t directly make them less profitable no. To do that in this example you would have to reduce your consumption of fossil fuels, change laws/taxation etc...

But it doesn’t detract from the fact that ethical investing can drive positive change in society and has the ability to push companies to change and adopt more ethical practices.

Yes, but the way ethical investing has worked most effectively has been for activist investors to buy shares in a company which gives them a base from which to question and change its policies.

Not-investing in a company to change its policies seems a pretty futile thing to do - after all you are probably not-invested in most of the companies in the world. 

It seems pretty futile because ethical investing is relatively small, the impact will be more noticeable as it grows.

Malthusian

Linton said:

thegentleway said:

It doesn’t directly make them less profitable no. To do that in this example you would have to reduce your consumption of fossil fuels, change laws/taxation etc...

But it doesn’t detract from the fact that ethical investing can drive positive change in society and has the ability to push companies to change and adopt more ethical practices.

Yes, but the way ethical investing has worked most effectively has been for activist investors to buy shares in a company which gives them a base from which to question and change its policies.

As in kickboxing, voting with your feet is more powerful than voting with your hands. The point of not buying shares in a company on ethical grounds is that reduced demand for the shares makes it more difficult for the company to raise more investment from the market with which to do bad things. But what has a far greater effect is consumers refusing to buy the company's products.

If there is demand for something unethical and it is legal to supply it, it will be supplied. If you don't put up the capital then someone else will. Economics always wins. That doesn't mean that ethical investment is pointless; the point is that you can sleep at night knowing it's not your money.

It only seems futile if you are trying to save the world instead of the true objective of ethical investing, which is to ensure that your money isn't involved in stuff you don't want.

"God grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference." Things I cannot change = the world's trillion dollar aggregate demand for fossil fuel energy, cigarettes and armaments. Things I can change = my money being invested in them.