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Ethical investing.

09:41 / 04.04.08

I have been thinking about a lot of the stuff in the ethic and corporate power thread.

I invest money in companies that I think will return a good profit to me. I wouldn't really want to invest in companies doing bad things.

I mainly invest in oil and metals. I currently have investments in companies with operations in the Philippines, Vietnam, Thailand, Tanzania, Kenya, Madagscar, Egypt, North Korea, USA.

What kind of investments do you believe are ethical, if any? Is it ethical to invest in oil and mineral companies?

ONLY NICE THINGS

11:19 / 04.04.08

Depends on what you define as ethical, really - we've discussed the ethical practices of some oil companies elsewhere. A good start might be to work out what kind of things you agree or disagree with, ethically. Personally, I wouldn't invest in oil or metals, but your ethical compass may be set differently.

EIRIS keeps a directory of funds that market themselves as ethical. It might be interesting to look at those and see what they are excluding on ethical grounds.

15:02 / 07.04.08

For my specific oil and mineral stuff I think they are al clean ethically. The world needs fossil fuels and minerals and poor countries make shedloads from these things. Look at what Chavez is doing in Venezuela with the oil money.

But I dunno, can I really justify investing in North Korea?

ONLY NICE THINGS

15:32 / 07.04.08

Well, industry's reliance on fossil fuels is actually leading to massive climate change, which you might have read about, and methods of mineral extraction are often environmentally pretty ghastly. So, arguably, a better investment might be alternative energies. However, if you tell us the names of the companies you are investing in, we can give them a quick ethical audit.

As for "investing in North Korea", it probably depends what you're investing in. Not, presumably, the North Korean stock market. Do you mean companies that operate within North Korea?

ONLY NICE THINGS

16:34 / 07.04.08

Look at what Chavez is doing in Venezuela with the oil money.

Incidentally, Chavez is getting to do this at least in part because of state control of Venezualan oil production - the Hydrocarbons Law of 2002 stipulated the production of oil outside certain specialised areas was the domain of the state, and specifically of Petroleos da Venezuala - relative to the nationalisation of the 70s, foreign investment is relatively important, but this is mainly a result of the current hunger for fossil fuels, which Venezuala is cashing in on by trading capacity for dollars. Also, of course, exposure to hydrocarbon prices has previously caused the Venezualan economy to suffer when prices are low, but that's just the free market for you.

21:26 / 07.04.08

Yeah, but you still need fossil fuels and minerals. So somebody has to produce them. I don't think the answer to climate change is supply side.

"Chavez is getting to do this at least in part because of state control of Venezualan oil production"

Once a country discovers oil all the power is with the government which can tax at will. Oil tax rates in the middle east run at 90% I believe and are still wildly profitable.

It is at the start when a country is trying to tempt explorers to invest in their country, with as yet unknown oil/gas/minerals, that the governments have little power.

ONLY NICE THINGS

21:31 / 07.04.08

So you're steering away from, say, oil companies which operate in Nigeria? Very wise.

11:28 / 09.04.08

Well I don't currently have any investments in Nigeria although I did use to work for Shell.

Of what I know of the bad stuff that happened there then clearly you don't want that but Nigerian government did and do make lots of revenue from oil which I would hope they would use for the good of the country.

Reading about the Ogoni people just now and and it is very sad.

05:30 / 11.04.08

Well I don't currently have any investments in Nigeria although I did use to work for Shell.

You cashed in the Nigerian investments for ethical reasons though, presumably?

07:50 / 11.04.08

I've never had any investments in Nigeria. I wouldn't rule it out, I'm currently invested in North Korea, but you can look at particular dodgy practices by compnaies and decide not to go there.

Trade and commerce and investment is generally a good thing bringing jobs and prosperity.

ONLY NICE THINGS

08:07 / 11.04.08

Well, we sort of have the answer, then. If you believe that increasing the movement of capital is intrinsically an ethical good, by definition any action you take in which you move capital, for example by investing, is so heaped up with ethics that unless the subject of your investment is actually dogmolestocorp plc, you will see yourself as behaving ethically. The only part that confuses me is the way you are seeking the approval of others on an ethical standard based on a personal view of the inherent moral goodness of trade and free markets.

So, let's turn it around, since otherwise we'll just end up with you saying "no, that's OK, that's ethical because it moves capital and therefore increases wealth" over and over again. A large number of different areas of quote-unquote ethical investment are identified in the fund strategies compiled by EIRIS. Some of those I would broadly put in my "this is not ethical" bin (tobacco, for example, or companies who do not release figures on their use of child labour), others I would not (for example, there are Christian funds which will not invest in companies which make contraceptive or abortifacient chemicals). What, rule of thumb, resonates _with you_ as ethical or unethical from some of the investment areas identified in the EIRIS reports?

09:29 / 11.04.08

When I think about it the only thing I see as unethical is if a company is doing corrupt stuff or forcing people to do stuff.

Like for tobacco/alcohol/sweets I don't have a problem with that. People enjoy tobacco/alcohol/sweets so it is up to the individual to decide. Maybe health isn't that important to them.

I have a problem with child labour or slavery or fundamental breaches of human rights like that. Corruption as well. Bribing people, fixing prices rather than competing fairly.

I suppose that's one side of it. The "I wouldn't support any company that does x". The other side is "I would be more interested to invest in a company that does y". Not to say that not doing y is necessarily bad, but that doing it is certainly well looked upon.

ONLY NICE THINGS

09:42 / 11.04.08

Yes- the EIRIS reports list both positive and negative investment behaviour for just this reason. You might feel that investing in tobacco, for example, is fine ethically but not something you personally want to do, say because a relative died of smoking-related cancer or because you resent the taxes you have to pay to the health service to deal with smokers' ailments, or even just because you don't think the return justifies it in terms of how much of a warm fuzzy and a cash growth it gives you, so what do you do with that cash instead? Ethics certainly isn't limited to just not doing things you think are wrong...