SOCIALLY RESPONSIBLE INVESTING
I am actually not a big fan of the family of funds known as socially responsible. The intent is good: we should want to at least do no harm, if not work to do good, with the lump of money we tuck aside to make money for us on the side. We shouldn't bifurcate the part of our lives that seeks to do justly in the world with the part of our lives that seeks to effectively invest our money.
However, do socially responsible funds accomplish that intent? Most of these funds simply screen out companies in "sin" industries such as alcohol, tobacco, and pornography. (By the way, with its ownership of some key cable stations, none other than GE is the largest purveyor of porn and therefore would be excluded from consideration by such funds.) Others go a good next step further and screen out companies that have poor track records vis a vis environment, discrimination, and/or animal rights. What you're left with, usually, is a basket of tech companies and financial services institutions. (Which, by the way, these firms do business with companies in "sin" industries, so is there really any way around enriching them?) Is a basket of tech companies and financial services institutions necessarily being more faithful to the Kingdom? For sure, it isn't an effective way to invest: that lack of diversification usually means the funds do well in some cycles and poorly in others.
Furthermore, I am of the opinion (now I am showing my political cards – and now the issue of sanctions on countries that violate human rights will have to be the subject of a future blog) that the best way to effect change is to be inclusive, not exclusive. Phillip Morris, for example, is going to sell cigarettes no matter what, as long as there is demand in the market for a product they can efficiently and effectively produce. Let's say a suitable Christian response is to lobby for them to 1) make their cigarettes safer, 2) educate the population on the health hazards of smoking, and 3) use their resources to fund initiatives that promote healthy living. If a few of those Christian voices were shareholders, might Phillip Morris listen more carefully? In fact, perhaps Christians should get in the habit of writing the CEO’s of companies in which they invest, to thank them for progressive thinking or to scold them for harmful practices.
I'm not advocating that Christians deliberately seek out investment opportunities with "sin" companies in order to maliciously take them down. I do hope that we Christians will use our spending dollars, our investments, and our voices as levers to reward good firms and make bad ones better. In my mind, what it means in this dimension to be “in” this world but not “of” it is to use sound investment practices (i.e. diversify, buy and hold, invest early and often) but to be vocal with our stake in letting leaders know what we value and what we oppose. If you lived in a city run by a corrupt mayor, would it be more spiritual to leave or to lobby? I would not judge you either way, but nor would I say that either way is definitely wrong. And so I think the same principle can apply to multinational companies. But I am open to counterpoint.
I am actually not a big fan of the family of funds known as socially responsible. The intent is good: we should want to at least do no harm, if not work to do good, with the lump of money we tuck aside to make money for us on the side. We shouldn't bifurcate the part of our lives that seeks to do justly in the world with the part of our lives that seeks to effectively invest our money.
However, do socially responsible funds accomplish that intent? Most of these funds simply screen out companies in "sin" industries such as alcohol, tobacco, and pornography. (By the way, with its ownership of some key cable stations, none other than GE is the largest purveyor of porn and therefore would be excluded from consideration by such funds.) Others go a good next step further and screen out companies that have poor track records vis a vis environment, discrimination, and/or animal rights. What you're left with, usually, is a basket of tech companies and financial services institutions. (Which, by the way, these firms do business with companies in "sin" industries, so is there really any way around enriching them?) Is a basket of tech companies and financial services institutions necessarily being more faithful to the Kingdom? For sure, it isn't an effective way to invest: that lack of diversification usually means the funds do well in some cycles and poorly in others.
Furthermore, I am of the opinion (now I am showing my political cards – and now the issue of sanctions on countries that violate human rights will have to be the subject of a future blog) that the best way to effect change is to be inclusive, not exclusive. Phillip Morris, for example, is going to sell cigarettes no matter what, as long as there is demand in the market for a product they can efficiently and effectively produce. Let's say a suitable Christian response is to lobby for them to 1) make their cigarettes safer, 2) educate the population on the health hazards of smoking, and 3) use their resources to fund initiatives that promote healthy living. If a few of those Christian voices were shareholders, might Phillip Morris listen more carefully? In fact, perhaps Christians should get in the habit of writing the CEO’s of companies in which they invest, to thank them for progressive thinking or to scold them for harmful practices.
I'm not advocating that Christians deliberately seek out investment opportunities with "sin" companies in order to maliciously take them down. I do hope that we Christians will use our spending dollars, our investments, and our voices as levers to reward good firms and make bad ones better. In my mind, what it means in this dimension to be “in” this world but not “of” it is to use sound investment practices (i.e. diversify, buy and hold, invest early and often) but to be vocal with our stake in letting leaders know what we value and what we oppose. If you lived in a city run by a corrupt mayor, would it be more spiritual to leave or to lobby? I would not judge you either way, but nor would I say that either way is definitely wrong. And so I think the same principle can apply to multinational companies. But I am open to counterpoint.
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