Fair question, and I should have been clearer, because the meaning is ambiguous. I would say ‘ethical investment’ has two main meanings:
1) investing money taking into account the ethically-significant consequences of your investment decisions.
2) making investments in the secondary market which avoid companies whose activities seem socially harmful (usually understood to mean companies involved in things like weapons or tobacco) and/or put money into companies who activities seem socially beneficial (usually understood to mean companies involved in things like clean energy or with strong policies on workers’ rights or equal opportunities).
I think ethical investment (1) is very much worth thinking about, because a large amount of the influence that most people in richer countries have upon the world is mediated by what they do with their money (spending, investing, donating). My post was about whether ethical investment (2) can be a part of ethical investment (1), and my tentative conclusion is – not really. However, I would say that most people’s understanding of ethical investment is ethical investment (2). Trillions of dollars are invested in funds committed to such policies, which suggests to me that many people think they are effective, especially since some of them pay management and other fees to invest in such funds which they could avoid by just investing in some sort of index fund.
Thanks for the clarification. The post is clearer now, but as long as I’m admitting that I don’t know things, I’m not sure I understand the basic economics of investment either. Is there a “for dummies” resource you could recommend here?
What is ethical investment?
Fair question, and I should have been clearer, because the meaning is ambiguous. I would say ‘ethical investment’ has two main meanings: 1) investing money taking into account the ethically-significant consequences of your investment decisions. 2) making investments in the secondary market which avoid companies whose activities seem socially harmful (usually understood to mean companies involved in things like weapons or tobacco) and/or put money into companies who activities seem socially beneficial (usually understood to mean companies involved in things like clean energy or with strong policies on workers’ rights or equal opportunities).
I think ethical investment (1) is very much worth thinking about, because a large amount of the influence that most people in richer countries have upon the world is mediated by what they do with their money (spending, investing, donating). My post was about whether ethical investment (2) can be a part of ethical investment (1), and my tentative conclusion is – not really. However, I would say that most people’s understanding of ethical investment is ethical investment (2). Trillions of dollars are invested in funds committed to such policies, which suggests to me that many people think they are effective, especially since some of them pay management and other fees to invest in such funds which they could avoid by just investing in some sort of index fund.
Thanks for the clarification. The post is clearer now, but as long as I’m admitting that I don’t know things, I’m not sure I understand the basic economics of investment either. Is there a “for dummies” resource you could recommend here?