See No Evil. Buy No Evil.
by andrew@JijiniMarkets - Tue 13 Feb 2007
Making money is the primary motivation for buying stocks or buying into any company for that matter. However, should making money be the only consideration? Is there room for ethics?
This thought occurred to me while listening to a report about the history of Barclays Bank in relation to apartheid and the slave trade. The slave trade links are debateable and have been vehemently denied by the bank. That they chose to operate and profit in apartheid South Africa is fact. This bothers me. That they currently make a lot of money is also fact. This appeals to me. The same applies to Shell and their track record in Nigeria. Scrolling through the list of companies in any stock exchange (in particular the large cap companies with long histories) one finds hundreds of companies that have crossed the ethical line at some point in their history. The list of possible violations is endless and to a large extent depends on the individual's point of view. Tobacco companies, oil/mineral mining companies in Africa and pharmaceuticals' in the developing world are a few examples.
In my view companies are like humans; at some point they have to be forgiven. As an investor this comes easily if a company is making money. Very few companies would be worth buying into if their past actions were a strong consideration. The biggest crime a company can make in its shareholders' eyes is to lose money. This is quickly forgotten if the company manages to reverse its fortunes. Reformed companies with previous ethical mistakes should be treated the same if they admit their mistakes, denounce their past and make amends by, for example, paying reparations.
For most investors however, I suspect the dilemma is easily resolved by turning a blind eye. Ignorance can be even more blissful where money is involved.
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