December 12, 2008
Investing Returns: Virtue vs. Sin
byRon Robins, MBA*An editorial from my globally popular ethical investing website,
I was recently asked to appear on a major business television programme to makethe case for the virtuous, ethical investor. And an opponent was to appear to maketheir case for ‘sin’ investing. Unfortunately, the debate never occurred as the fellowwho was to defend sin investing could not be pinned down for a show time.However, thinking about the show spurred me to examine this subject and as to whyI feel so strongly that the future belongs to the ethical, and shall I say, virtuousinvestor.Of course the definitions of what actions are virtuous or sinful vary widely. But, forthe sake of simplicity, I believe that what clearly enriches and enhances life isvirtuous and that which creates death, suffering, and harms society, is sinful.
Tobacco—the classic sin industry
Consider the case of tobacco. In the past, tobacco was often considered a goodstress reliever. In fact, that is still how it is sold today in some parts of the world.Not long ago tobacco supporters reasoned that society benefits financially from itsuse. Smokers pay a lot more in taxes, and since they die earlier, do not make as biga drain on health care costs as someone living a longer life. Today though, we knowthe toll of this product on human life and its costs to society are immense. Andtherefore most countries are making substantial efforts to curb its use.So even though tobacco companies continue to increase their profits, pay handsomedividends, and have held up well in these difficult markets, their future remainsbleak.
Ethical investors consider wider effects of investing
Ethical investors mainly want two things. Firstly, they invest for profit. Secondly,they want their investments to create a holistically beneficial environment forthemselves, their family, community and society.Furthermore, ethical investors understand that when they invest in a company, (ormany companies such as in a mutual fund, unit trust, ETF, etc.), they share in theresponsibility for the activities of those companies as well as participate in theoutcomes of corporate actions. Thus, their personal and spiritual development can beaffected by what they invest in.
And concerning investing returns, most long-term ethical and socially responsibleinvesting (SRI)studiesgenerally conclude that there is no significant difference whencompared to investing conventionally. Some actually show that you might doevenbetterwhen applying your personal values to investing.