Socio-ethical investing and the philosophical implications
There are many types of investing that stake a claim to be socially responsible or ethical in nature. These investments may either be environmentally friendly, support the protection of workers human rights, or be based on the health of individuals, either in their company’s treatment of the employee’s physical bodily health or in their support for economic justice. These broad categories of directing investment dollars into companies that meet such criteria are generally termed ‘socially responsible,’ ‘ethical’ or ‘socio-ethical’ investing.
The question these terms raise, given this meaning, is what is the role of capital in such directives and goals? How do these types of investment affect potential returns, and in the larger picture, are they making the socio-ethical difference that they seek? Our view is that investing should certainly be of the highest ethics, and that means that the relationship of the client to the investment manger or fund is the first level of ethics. The second level of ethics is that every attempt is made so that companies that are unethical in nature, in how they operate their business or handle human rights, are not supported by capital from an investment firm.
The third aspect of this question is harder to determine, that being, what is an ethical company and how does an investment fund verify and investigate or control what is an ethical investment? A follow-on question to this is just as important. Do such attempts at oversight actions make a difference? Certainly, investment returns tend to be significantly lowered the more restrictions and oversight is applied to the capital flows. And if corporate behaviors are hard to measure or are not consistently impacted by these directives, does it warrant this effort when higher returns to a client may have an even greater positive impact in the world?
For example, if I support Waldorf Education as an ideal, and I want more students to be able to attend a Waldorf School, should I invest ‘ethically’ for 5% returns while I could achieve 25% return without restrictions, especially when these may even achieve similar goals? Is it possible more people could attend the Waldorf school given these higher returns, and that I am making a short-sighted decision to believe I’m investing ‘ethically?’ In the case of Waldorf Education, for example, the first school that was founded was for the worker’s children at a cigarette factory. The originator of Waldorf Education, Rudolf Steiner, was an individual of the highest personal ethics. He did not judge the families who worked in the tobacco industry or judge the owner of the tobacco company. In fact, he founded his new form of education with the help of the tobacco company owner. Thus, he based his decision on the needs of children, not an external moral structure.
At Triform Capital we work towards the highest level of integrity and consider all aspects of how our investments impact society and the world. We are formed out of the same ideals that founded impulses such as Waldorf education and stand by ecological and socially responsible impulses. But we do not believe that the Political or Cultural aspects of society should be determined by the Economic. In the domains of Politics, we leave those aspects of human rights that properly fall under the Political. In the domain of the Cultural, we leave those aspects of huma freedom to the artistic and educational institutions. The domain of the Economic is one of capital flows and stands upon the integrity between the client and the fund manager, what may be termed the ‘consumer’ and the ‘producer.’
While many firms claim to be socially responsible, do they have a philosophical approach? Here we articulate our concept of economic investment from a socially-inclusive perspective. We are proud of our apolitical mindset that listens to multi-faceted perspectives without judgement, always looking for common ground.
