Sometimes, I feel that no matter what you do, no matter how much research is done, there are always skeletons in the closet. This is how I feel after reading about the lawsuit against Chevron.
One thing I didn’t account for when I did Chevron stock analysis was to look at the company’s dark side. I didn’t do any research to find negative articles regarding the company. Why I didn’t do such work before trading CVX? It’s simple; I thought others would have done their homework.
The funniest part is that I trusted major Socially Responsible Investing Indexes to do the work. I thought they had enough resources and eager researchers to find the skeletons in the closet of any company. Back in November 2010, CVX was part of my socially responsible investing portfolio. So this is my question today: to what point are you ethical?
This question isn’t only limited to the investment perspective but throughout your whole life. When I said I was happy to see Chevron fight back and defend themselves against the lawsuit, I also added that I hoped they were right. I won’t be the first to throw stones at someone or at a company… until they are proven guilty. But on the other hand, I’m wondering how one can be successfully ethical in your life?
What I mean is; it’s fairly easy to make ethical choices when it comes to your own actions. For examples:
– I’m trying to find ethical companies to invest in
– Each year, I give a portion of my income to charity
– I try to teach good family values to my children
– I don’t buy knockoff clothes or other products
– etc.
These actions are easy to do since they don’t require much effort. They are just triggered by single day-to-day decision I am make. However;
– I don’t spend hours to find out if the companies I invest in are ethical
– I don’t look over what is being done with my money when given to charity
– My children may do things that are not ethical (actually my son got into a fight at school last week!)
– I don’t do research on my latest pair of jeans to know where it was manufactured
– etc.
So, how can I claim to make ethical choices? I’m not sure anymore. Honestly, I really want to make the “right” decisions but I don’t really have the time to review each movement done by a company or an association around me.
Some say to never believe companies… but based on this premise, should we always believe journalists? Or politicians? In fact, who can we really trust? If the answer is no one, then, what is the point of making research to make sure your make ethical decisions? You have to believe someone somewhere somehow.
Do you have any tricks? Is it important for you to make ethical decisions? To invest responsibly? I thought I was when I purchased Chevron since they were part of many SRI indexes, claiming to be a first class employer and to invest massively in alternative sources of energy. But what really does matter? Polluting the Amazon or producing cool social reports for financial analysts?
I’ve said it here before, and i’ll say it again: SRI indexes are a joke. The “best of the worst” so to speak.
It’s high time I write on the subject as far too many people are lulled into the false hope of being socially responsible while investing in earth destroying industries.
A simple good of: company name + social/ethical will yield opinions on both sides of the fence. This is a good place to start if you truly care to learn about the dark side of some of these companies.
@ Sustainable PF,
Yeah.. this is what I am slowly discovering! but do you really get into deep analysis of social responsability when you consider investing into a stock? how much time and resources do you spend on this?
I tried and pretty much gave up! Every company has some dirty tick up its sleeve, that is an inconvenient truth.
Think Google is not evil? There was a case a long while ago when CNET posted personal details of Google’s CEO mined from Google’s results!
Infuriated, Google responded by boycotting CNET reporters! In my opinion, CNET did nothing wrong.
Do I not boycott companies when I invest? Yes I do. I have my reasons, but I wouldn’t force them on others. I wouldn’t judge someone else for investing in companies I boycott.
This simple philosophy works for me.
Most investors would just say “Forget about ethics in the stock market” It’s an antithesis! Just try to make money the old fashion way, which is buy as low as possible and sell higher.
There is a lot more to this story than is being told in the article and on these comments. First off, the lawsuit is against CVX, but for a time period when legacy company Texaco operated Ecuador. PetroEcudaor took over operations and Texaco worked the remediation and the Government of Ecuador signed off on Texaco’s relinquishment of responsibilites. In other words, the sites were clean. PetroEcuador then proceeded to operate the sites from early 1990’s on. The lawsuit claims the sites are the responsibility of Texaco, however the Government of Ecuador itself signed off on Texaco’s remediation. Since then the “expert witness”, Judges and plaintiff lawyers have all been found fraudulent by any court outside of Ecuador. This is not the same thing as referring to BP or Exxon’s spills, this is extortion.
That’s the thing about ethics — there aren’t easy answers. Personally, I think any individual or company that claims to be absolutely ethical is demonstrating questionable judgment.
First of all, no matter what, there are shades of grey in ethics. Obviously anyone who deliberately and knowingly commits an “unethical act” is more “unethical” than someone who does it without knowing. On the same track, someone who does it unknowingly, but makes no effort to know, is worse than someone who makes an effort to learn but fails to uncover the right information.
No matter how much you research, there will always be things you don’t know. In fact, I would argue that there is likely always more that you DON’T know than that you do.
On top of this, there are often trade-offs, where the right decision from one perspective is the wrong one from another perspective.
My suggestion would be:
1. Know your own values.
2. Seek to understand as much as you can about the issue/topic.
3. Make the most “ethical” decision you can given all factors.
4. Keep learning, and be prepared to admit that you were wrong.
5. If it turns out you were wrong, don’t beat yourself up over it – but keep learning and adjust (in this case, sell?) if you are now convinced that it is the right thing to do.
Just my $0.02.
It’s really important to look at where your money is going when you donate to charities actually.
Many organizations waste a lot of money on administration and management, with only a small portion of the donations going towards “the cause”. This is especially true with hospital foundation lotteries and large human-disease organizations.
In Canada, you can look at a charity’s financial statements through this site: http://www.cra-arc.gc.ca/chrts-gvng/lstngs/menu-eng.html
Using the site, you can see how much money they spent on programs, administration, and how much they have socked away in investments.
I’m especially appalled by organizations that run yearly fundraisers (think cancer research especially) when they have over 100 million tucked away in investments – with only 1.3m given towards research grants. This was taken from an example I found in the website above. How many diseases are being neglected just because one group of diseases has a better marketer?
Anyways – I think it’s good to give. I personally try to donate my time rather than my money to causes that I believe in. But I’d encourage you to research any charity before you donate.
@Mike – I spend some time researching the ethics of a company in the same manner I try to truly understand their product and business plan. It is just one additional factor I take into account when choosing a company.
@Moneycone – Agreed – no company will be entirely “clean” but there are those which are clearly better than others. “Best of industry” as used by SR Indices just seems wrong to me. Coke has done some NASTY things over time and how can a polluting oil company be considered “responsible” – because it treats its employees fairly and dumps a ton of money into pretending their “nice”?
Hm. Chevron? It’s hard to conceive of any oil company being socially responsible or “ethical.” My father worked for Aramco, Standard Oil, and Mobil. LOL! No member of this class of enterprise strikes me as likely to be “ethical.” They’re not in business to enhance anyone’s well-being moral standing.