People have been grappling with the thorny interface between money and values for centuries. One such person was Jesus, when he kicked some money-changers out of a temple premise because they were making money with no consideration of any ethical value or spiritual sense. Since then, arguments about how far our pursuit for money should be allowed to influence our lives have been contentiously going on.
There are those who see no wrong in separating their financial choices from their social or moral values. And they will tell you, “Don’t mix money with your ethics. Your ethical meddling will only spoil your bottom-line profits and even mess up the efficient functioning of the market.” As such, people with this kind of mindset have no problems investing their money in any kind of business as long as it can generate a lot of money. For them, there is no such thing as social responsibility or ethics in their investing. No wonder we sometimes come across environmentalists owning stocks in some of the worst pollution-generating companies, health practitioners investing in tobacco-related products, and evangelical Christians holding a “sinful” portfolio in some shady business firms. Granted, many times they aren’t even aware of these contradictions. But the real question is: Could anyone shrug off his or her social responsibility and simply say, “business is business?” At the wider level, we see similar attitudes or practices with many big corporations, which are all about profit---corporate greed---even if it comes at the cost of harming innocent people.
What, then, is value-based investing? The Quakers, for example, are often credited in American history as the first socially responsible investors. These devout Christians in the 16th century believed that their business practices needed to be consistent with their value system. As one example, they refused to invest in slave trade because it clashed with their belief in the equality of all peoples before God.
Of course, many indigenous peoples have long histories of social responsibilities. Even tribal capitalists were not business predators and investors who cared only for their own selfish interests. Their business dealings transcended the constraints of barter. They were the feast givers. Their capitalism began not with taking but giving, sharing their wealth and resources with their community members. Thus, in their own way, they were value-based investors who recognized that, at the core, business arose as a means for them to serve others, while it also improved their status.
As human economies have grown more complex, the ethical questions surrounding business and investing have posed greater challenges to us today than ever before. But there’s also a gradual awakening of value-based investing as more and more people are seeking ways to align their economic interests with their social responsibilities. In other words, people are increasingly upholding their social and environmental values while making a lot of money at the same time. Thus, they are bringing values back into economics.
Especially those born after the 1990s are now acutely concerned about the social imbalances and environmental degradations caused by unbridled greed for personal gain. This generation is leading the way to reintegrate economics with core human values. As a result, even politicians are slowly learning to work within the halls of power by paying attention to the ways in which money is directed. Many advanced countries, for example, are already developing their own unique forms of value-based investing. As in developing countries, some governments are providing loans to enterprises that are committed to alleviating poverty or serving the common good.
To understand the significance of these interconnected dynamics, let’s imagine global economics as a living entity such as your body. Think what would happen to you if certain parts in your body were mined as “raw materials” for production or sale. If that were to happen, how long could you survive, even though your blood cells are still plenty in other parts of your body? Of course, you can’t survive long because every part in your body makes up the whole and all of them are interconnected. And yet, we destroy nature this way for the sake of selfish gain. We treat our environment as mines and dumps; we take what we want from the earth and create waste. As a result, nature’s life-support capabilities gets threatened.
Now, as it relates to investing, it is irresponsible to focus only on our profits … with little or no regard for our social and environmental costs. Put it another way, value-based investing calls for a balance in everything, because no venture is sustainable unless the social and environmental aspects are also given their due consideration.
To sum it up, every investment or business has a social and environmental dimension. Therefore, we should apply ethical standards to our investing and businesses. By bringing life-changing values back into the center of our economic lives, we can make the world a better place for all, while creating clean wealth for ourselves.
