Trading Pal Blog

Ethical investing is a moral issue. If you do your research into a given stock you are bound to uncover issues you may not agree with. So do you put your money where your mouth is not?

In the past people had rightful concerns about investing in military contractors, cigarette companies, gambling operators, etc... Today the spectrum widens as some would be innocent operators turn out into major public relation disasters. But how can you tell in advance if a public company is above board?

The short answer is you probably can't but the question really is: Do you invest with your head or with your heart? Do you know enough about the history, the background and the mindset of a company to be associated with them? Instead of investing your money, would you invest your time that is your working life there? How would it feel like if instead of an investor you were an employee?

What are the issues that would make you embarrassed of financing an operation in the view of earning a profit from it? Do they have a social balance sheet? How do they treat the people whose livelihoods depend on wages paid? Do they train their own staff or would they rather steal employees from competitors?

If a mining concern, do they improve the lives of local residents or do they pollute the water supply?

If a drug company, do they test new medicines in third world countries on unsuspecting volunteers?

If a food company do they use reckless marketing to promote harmful products? Remember Nestle selling baby formula as an alternative to breast feeding.

What is the company safety record? Was the widow of a workplace accident victim treated fairly?

Does the company have a 5, 10, 20 years plan? Has the board recently appointed a new CEO who is going to turn the operation into a cash cow - a bonanza for investors, a disaster for employees and customers?

Does the company stand by its products or do they hide quality assurance issues? Remember Toyota and the massive recall.

In the long run bad policies will turn out to be bad investments. Invest with your head to look at all the fundamentals but invest with your heart to spot an ethical operator who add real value to society and by correlation value to investors also.

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