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Ethical Investments - The New Investment Option
by Danca Risamio
http://www.ruinvestment.com

Ethical investment is a fairly new concept - look in a
university economics textbook from fifteen years ago and
there will probably be no mention of the term. However many
experts think that it is an idea whose time has come, that
perhaps it will be of major interest in the twenty first
century.

Of course ethical investment is all about ethics - the
value system by which we live our lives. The question What
Is Ethics? has caused philosophers to argue for centuries,
so we will have to accept that each person may have a
different concept of ethics.

In terms of investment, the ethical investment movement is
founded on a new understanding of investing amongst
investors. In the past many individuals and institutions
happily entrusted their money and future to experts in
finance, simply asking them to search for the best return.

Once they had invested the money, most investors were only
concerned about the returns. The money entered a sort of
no mans land where it could not be touched and few worried
about the type of industries or companies they were
investing in.

Such ignorance has caused some organizations embarrassment
however. For example unbeknown to the Church of England who
criticized the use of land mines, their money was being
used to fund companies involved in the making of such
devices. Priests are not usually financial wizzkids and it
is easy to understand why they had handed over the
responsibility of their investment to an investment
specialist. However, any investments made by the church
since then have been scrupulously investigated by the
General Synod of the Church.

It is the same for individual investors. One investor may
scold his friend for smoking too much whilst not having the
least idea that his financial investments are funding
cigarette companies.

Hence some people have decided that they want a more active
role in deciding who they are going to invest in. They are
checking their portfolios in detail and some are even
choosing to move for companies that specialize in ethical
investment.

Now, given that it is not clear cut what each person
considers ethical, each investor needs to take some
decisions. For instance, do you want to invest in companies
that make and sell weapons? Some would say they do not mind
investing in these things, since it is the job of society
to regulate the use and abuse of firearms. Others would
rather avoid these companies - but might be surprised how
much this limits their choices!

What about companies that use dollar-a-day child labor in
the far east? Is this an unforgivable exploitation, or is
it capitalism at work? Do the jobs give the poor in a poor
country a chance, or do they deny kids the opportunity to
go to school? Does moving US production abroad deny
Americans jobs or does it make products more competitive
and improve the balance of trade?

There is no doubt that questions about ethics are
complicated, but many people now want to start grappling
with them. And although each small investor may not make
much difference, added together they could present a
problem for a company. If a lot of small investors choose
not to invest in a particular company it could give them a
clear message that their activities are not compatible with
the ethics of society - they may change their ways!

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