Ethics in Investing: Maybe the way to make more money is to act in a responsbile way.

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It is apparent that social responsibility, environmental sustainability and management plays a role in investing. As shown in a video series on otpp.com responsible investing is more complicated than it seems.

Take for example the bio-fuel industry. It seemed like a great idea to make an environmentally responsible investment to reduce the environmental harm caused by extraction of oil. However the high increase in demand for wheat driven by increased production of ethanol, drove food prices up. What was an environmentally responsible investment quickly turned into a socially irresponsible one.

What then should we focus on to make the most responsible investments? The nature of the industry plays an important role in this assessment. The tobacco industry is bad because Tobacco kills people. It is also important to take account the companies mission or value set, and the fate of the company’s workers in other parts of the world.

In our highly pluralistic world the level responsibility and transparency has a significant impact on how well the stock of a company is doing in the market. Hence responsible investing seems to reduce risk.

As Milton Friedman would say, the objective of any investment is to make more money. Maybe the way to make more money is to act in a socially and environmentally responsible way.

To read more about this you should also check out this business ethics blog post by Chris McDonald.

Responsible Investing

2 thoughts on “Ethics in Investing: Maybe the way to make more money is to act in a responsbile way.

  1. Pingback: Ethics in Investing: Maybe the way to ma… | Business Fundamentals Section 104

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