Will ethical investors keep green businesses green?

February 22, 4:27 PMDC Corporate Ethics ExaminerJim Cunningham

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"Ethical investors" enjoy their cabbage without losing sleep.

There is a movement among conscious Americans to put their money into investments that match their value systems. They call themselves “ethical investors”. While most media outlets have a Business, Money or Finance section, The Christian Science Monitor, a deservedly reputable newspaper, calls their section “Money & Values”, almost defiantly daring anyone to call it an oxymoron.

Ethical investing can be defined as avoiding investments that do harm. This could mean avoiding the manufacturers of harmful products such as tobacco, weapons and cancer-causing chemicals. It can also mean avoiding businesses that do harm, such as animal testing, or violating human rights. But ethical investing often means searching out investment opportunities that do good, and today that often means “green” business.

The Christian Science Monitor, a deservedly reputable newspaper, calls their section “Money & Values”, almost defiantly daring anyone to call it an oxymoron.”

Companies are accountable to their stock holders, sometimes to a fault. This often means that, at the behest of those demanding better and better returns on their investments, businesses make sacrifices to meet those demands. Quality may be compromised. Employee hours and benefits may be cut. Layoffs may be made. Their customers may receive less for their money or incur new fees. In other words, the things that made the businesses successful on a variety of levels may be compromised when that business goes public in order to satisfy the short-term goals of greedy investors.

But what of companies that draw investors specifically because of their values? These “ethical investors” could be their saving grace. The lure of higher and higher investment returns may be great, but “ethical investors” will balance this against that which drew them to choose “green” businesses to invest in to begin with. Why would a company compromise their value system when that value system is the very thing that attracts their investors?

Sure, some investors will choose green simply because they see it as a money-making opportunity and nothing more. These entirely-profit-focused investors will always apply pressure on the decision makers, and in the board rooms, but “ethical investors” may mitigate their effect.

In theory, the relationship works. Let’s hope it’s profitable. It could serve as a positive business model for maintaining ethics, and keeping investors happy at the same time. Let’s hope that green business and “ethical investors” can team up to teach us that those things don’t have to be mutually exclusive.