What is an ‘ethical’ investment?

Poor Justin Welby eh? One day he’s railing against pay-day loan companies (as any sensible person intent on currying favour with the collective Guardian readership would do) and the next day he’s found out that the Church of England has been ‘indirectly’ funding Wonga the whole time. Whoops! Welby has professed himself to be ’embarrassed’ and ‘irritated’ by these revelations. Perhaps being the Archbishop of Canterbury prohibits him from expressing any stronger emotions, like how a Jedi shall not know anger, nor hatred, nor love. (Yes, I know that this interpretation of the Jedi code is hotly contested by everyone except those responsible for the Attack of the Clones poster. I’m not getting into that here ok?) Anyway, it’s clear that Welby is pretty pissed off by this turn of events.

I’ll admit to a certain degree of schadenfreude at the prospect of Welby feeling embarrassed about anything. If you are in the habit of going around moralising on any given topic you’d do well to make sure you aren’t guilty of the same thing yourself. Now Welby looks like just another clueless investor, pathetically clinging to a plea of ignorance to avoid the charge of hypocrisy. He is vowing to scrutinise where his money actually goes more carefully in future, in a bid to maintain some credibility. Actually this is mildly reminiscent of one Rupert Murdoch, claiming to be unaware of the practice of Voicemail hacking and trying to persuade us how humble he felt. Watching powerful men squirming when they get caught out is always pretty funny!

Or so I was feeling up until about an hour ago, when a pension update came through my letterbox advising that the investment options are changing. And I thought to myself, do I know where all of my money is invested? Absolutely not! Between us, Terry and I have several pension funds, plus bank accounts & savings accounts. I have no earthly idea where that money is invested. I might be funding pay day loans, munitions, tobacco, fossil fuels or any number of other industries I find morally repugnant.

So, I am going to stop pointing and laughing at Justin Welby, and focus instead on the fact that his current high-profile humiliation is raising some awareness about the shadowy world of the investment portfolio.

I’ve always taken pride in my fiscal prudence, and I regard myself as pretty savvy when it comes to personal finance. For nearly a decade I have been paying into a pension, which, supposedly, will furnish me with a retirement income that will keep the wolf from the door in my twilight years. I’m fortunate in having a defined-benefit-final-salary pension, so the amount I get in retirement should, theoretically at least, not be dependent on how well the fund performs over coming years. And as as result of this, I realise I am myself just another clueless investor, pleading ignorance as to where and how my money is invested.

For those with defined contribution schemes, which are now the preferred type of pension in the private sector, the investor is periodically asked if they want to change their investment options. Amongst the type of funds available, there is usually an ‘ethical fund’ option. These funds purport to avoid stashing money with companies and industries which do not meet a certain ethical standard.

In the 6 years I spent studying moral philosophy academically I developed a healthy scepticism for anything claiming to be ‘ethical’. Mostly because whether or not something is ethical is a) highly subjective, and b) utterly dependent on context. Earlier I listed a few industries I claimed to find morally repugnant. But if I’m honest with myself, are my moral judgements here really so cut and dried? Scummy advertising campaigns and 4 figure APRs aside, pay day loans can serve a purpose if used carefully. I find the notion of war and violence abhorent, but what if weapons are used to arm rebels trying to overthrow a corrupt and dangerous government? I might yearn for the day when all energy comes from renewable sources, but in the meantime I want big oil and gas to be able to keep their costs down so that people can afford to keep warm in winter. And tobacco companies might, er, well they might contribute to research to improve treatment for lung cancer…OK, that’s stretching it a bit. But the point stands, that I actually struggle to make an absolute moral determination on the ethics of a particular company or industry.

But even if I’m not convinced whether my money is invested ethically or not I think I’d still prefer to know. I’d rather face up to the truth of who and what I am funding, and then take responsibility for that investment, than refuse to peer under the rock for fear of what I might learn. Wilful ignorance is not bliss, it is a refusal to engage in the truth. And that is something that I know is immoral.

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