November 26, 2010 3:48 pm
Everyone invest in stock market for making money. But money can be made in investing ethical and non ethical companies. What does your conscience tell you?
There is non-standard strategy also which can be applied in this particular case. A highly socially conscious person SHOULD invest in stocks which he finds distasteful / morally unethical / etc. If they do well, he will make money, which he can contribute to other social causes. If they do not do well, he can remain pleased that those companies are not flourishing. 😉
Ethical and unethical is very subjective. I invest in stock market to grow my money. It doesnt matter if its HDFC ltd or LIC Housing ltd. Both mean the same to me provided they make money for me.
Either you mix ethics and companies or you dont. You cannot say one company is 70% ethical and the other is 40% ethical, so I would invest in the “more” ethical company and still consider myself an “ethical” person. 😉
Ethics as a whole should reflect in business practices followed, non violation of rules and most importantly socially responsible. Compare corporate houses like Reliance and Tata. Which one you find is more ethical in relative basis?
My view is, everybody should have their own set of ethics and preferably abide by them. In times of adversity, do not be a hypocrite.
Both ITC and Nestle are good companies with multiple diversified businesses and one should not brand / label them as ethical or non-ethical. Whatever you think / evaluate about a company, please dont publicise it.
Ethics is very subjective and personalised matter. Everyone’s views about what is ethical and what is not ethical could be very different. Also, many people consider investing just an act of making profit and do not really go into ethics related issues. That is perfectly OK from their view point.
For my part, I am believer of socially responsible investing. I generally invest in stable companies for very long term and seldom sell any of shares, irrespective of market fluctuations. Therefore, I like to think myself as part owner of the business, although with very small and insignificant stake. With this type of thinking, it is not possible for me to consider making money out of business which is generally harmful for the society as a whole. So, I do not invest in companies operating in businesses such as tobaco, liquor, asbestose products, casino operators etc. Fortunately, indian market has many other opportunities to make money. Hence, not investing in such companies has not affected my monetary returns and I am able to sleep well with clear conscience. For example, for every ITC, there is Nestle which is as good a company.
I will repeat that this is highly personalised matter and I believe that nobody should impose their believes on others. I have just outlined my way of investing and I do not consider it binding on anyone else.
Ethical and non-ethical issues are related to how we look at it. If ITC stops manufacturing cigarettes, will people stop smoking it? leave big industries. are we ready to cut down our AC consumption as it pollutes the environment?
Suzlon produces wind enegy and contributes to energy conservation. But its position is precarious in market.How many of us are willing to risk buying its shares. Even if we want to buy it, we will only see the potential profit it will bring to us in the future and not its ethics issue.
I fully agree with Ramesh on this issue.
I think what Atul meant was companies engaged in things which can be classified as ethical and non-ethical . Like ITC is in ciggerates , Or some company which makes too much of pollution might be in category of non-ethical as per “Atul” , not in general !
Is there any prospective definition of an ethical or non-ethical company?
Or do you mean ethical or non-ethical management? 🙂
And how can you identify that?
I would prefer companies with strong balance sheet, good future growth potential and reasonable valuations. Efficient management is a key feature.
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