Investing with eyes closed
Last month, charitable trustees decided that ethical investment was not for them. Their job was to make money, they said, not to worry about how that money was made.
The decision was a fairly predictable one. Partly because ethical principles rarely seem to be a high priority for most councillor-trustees; but partly also because, when it comes to putting pounds in the pocket, ethics are almost invariably thrown out of the window.
One of the great dangers (or great beauties, if you prefer) of capitalism, is that it allows us to imagine a moral distance between ourselves and what our money is actually doing. When we deposit our pennies in a bank, few of us ever question what that bank is doing with the cash (aside from paying its own staff massive bonuses of course). We don’t want to know what they do with it, so long as they give it back to us when we ask, and preferably with some interest attached.
Similarly, although ethical investment is an increasing trend, the prime concern for most shareholders and investors is, quite understandably, how much money is being made. How that money is earned . . . well, who cares?
This blindfolded approach to investment is in essence no different from that of, say, a drug dealer, who can quite easily distance himself from the damage he causes so long as the cash keeps coming (a drug dealer is, from an ethical perspective, no different from a tobacco company, except the dealer kills fewer people). Moral justification is unnecessary, because money overrules morals every time.
Companies that the charitable trust currently invests in are responsible for some pretty unpleasant activities.
Essentially, the trust holds shares in a “unit trust”, which in turn holds shares in every UK main market listed company. Ninety per cent of these are held in the FTSE 100, which includes firms selling tobacco and arms, as well as companies accused of environmental degradation and human rights violations. Moreover, a number of these companies have been accused of illegal activities. And one, BHP Billiton, is currently embroiled in an investigation by the US Senate into its involvement in forging documents while trying to foment political opposition to climate change legislation.
It is a sad fact that unethical actions do make money. And so long as shareholders continue to take a blindfolded approach to the markets, companies who engage in unethical activities will continue to be successful; without that investment, they could not continue. For investing is not a morally neutral activity. There is a distance between the person who sells cigarettes to children in the developing world and the person who pays him to do so; but it is only a geographical distance, not an ethical one.
During the debate, charitable trustees spoke as though their current investment situation was a passive one, and that it was inappropriate to take action. The consensus was that fund managers should be left alone to do their job. But that is a misreading. By continuing with their investment, trustees are actively sanctioning the activities of these companies, and Shetland’s money is being used to support them. Trustees cannot claim ignorance of what is happening. They are aware, and therefore they bear a degree of moral culpability. Washing their hands, like so many Pontius Pilate’s, only serves to emphasise this culpability.
In Norway, managers of the country’s massively successful oil fund do specifically avoid companies in breach of its ethical guidelines, and these include at least three of the FTSE 100. It is a shame our own fund cannot be run on such principles.
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A quick suggestion: If the hastily agreed annual handout to all over-65s is really about tackling fuel poverty among the most needy, perhaps a rethink is in order. Surely a more sustainable idea would be to invest money in properly insulating people’s homes. That would require only a one-off payment rather than an ever-increasing annual one; it would actually reduce fuel costs and consumption for people, rather than simply pour money into a hole; it would allow people to be less vulnerable to sudden rises in fuel prices; it would provide work for installers, keeping money within the local economy rather than just giving it to energy companies; and it would help reduce Shetland’s currently excessive carbon footprint.
Please councillors, do something positive and constructive with the money, don’t just give it away without thinking.