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Thought for the Week
Ethical Investment: Discerning the right thing to do
My ethics are my conscious behaviour. This behaviour can be selfish, like a small child, or caring, as with establishing a foundation for the care of historic monuments. My behaviour can be rules-based, like the ethical posture of the Co-operative Bank, or reasoned, as with Tony Blair’s war on Iraq.
Ethical investment tries to connect investors to ethical behaviour by managers of assets and companies. Difficulties arise when we apprehend that, over time, most people behave in inconsistent ways, and that groups of managers are vulnerable to context, leadership, fear and groupthink. The consequence is that what looked like a reliably ethical investment last year can become this year’s corporate devil.
One way to engage with this is to recognise that we are poor at predicting what groups of business managers will persuade themselves what ‘the right thing to do’ is; so we put in place social and institutional constraints against corrupt practice. But the constraints can only ever tell us what we should not do. Just like adolescents at school, as soon as the managers dream up a ploy that is not specified, they find their way around the rules.
Another way to engage is to confer with self and to ask: ‘Am I proposing to do as I would be done by?’ This approach is limited by the breadth and depth of our awareness of the consequences of our proposed action. If I do not remember to think of the collateral effects of my decision, it makes my decision appear a lot more straightforward.
A more useful, and more challenging approach is to confer with self and then to confer with others, ideally all of the other engaged stakeholders: affected communities, employees, the material sources and destination environments, as well as family, colleagues, managers and shareholders. This broadens and deepens the information we consider, it also increases the likelihood that the caring, reasoning and rules-based perspectives are all considered. Conferring widely in this way is time consuming and can be difficult, often exposing us to perspectives we do not share and people we may not respect, whose company we do not enjoy. It is hard work that only leaves us with a messier, less attractive way forward; but it does leave us with a track record we can easily share with our aging and frail mothers!
Love calls us to be patient and not to be provoked, not to take into account a wrong suffered. In conversations that include diverse stakeholders, seeking to discover what the right thing to do is, it is easy to forget love, and to bridle at some of what we hear. Often it seems easiest just to make our own private or small group judgment and to proceed.
So, we can see that ensuring adequate process in investment decisions calls for love at its best and also for extraordinary discipline. This is best ensured when it is role-modelled – and then formally required of others by investment decision-making leaders – and when what is done is clear and easily remembered. To establish what is RIGHT: What are the Rules?
Are we acting with Integrity? Who is this Good for? Who could we Harm? What’s the Truth? We need to:
STOP THINK TALK UNITE ACT
Eoin McCarthy Threshold Consulting Ltd.
Member of the Quakers and Business Group.
the Friend, 14 October 2011