Unethical investment

Nature

Unethical investment refers to allocating capital in enterprises or projects that engage in practices harmful to society, the environment, or ethical norms. Examples include industries involved in child labor, environmental degradation, arms manufacturing, or corruption. Such investments prioritize financial gain over moral responsibility, often ignoring social, environmental, or governance concerns. As a problem, unethical investment perpetuates exploitation, inequality, and ecological damage, undermining sustainable development and public trust in financial markets. Growing awareness of these consequences has fueled calls for responsible investing approaches, such as Environmental, Social, and Governance (ESG) criteria, to align investment with ethical principles.

Incidence

Through the 1970s and the 1980s, any form of investment in South Africa was considered unethical. This ban became questionable in 1993. Attention has shifted to China, because of its poor human rights record. China and many emerging markets fall far short of such ethical ideals as equal employment opportunities, the right to organize trade unions, domestic laws on minimum wage and maximum hours of work, anti-pollution controls, and the like, especially with the use of prisoners to benefit economic production. Concerns have also been expressed with regard to logging companies operating in Indonesia and Malaysia. In the case of Chile there is concern about the fact that 10% of copper sales go directly to the military which continued in 1993 to have an inordinate influence over the government and human rights issues.

Claim

Just about every corporation deals with another (often a bank) that makes money from some undesirable activity.

Counter-claim

Whether an investment is judged ethical or not usually depends on the investor's liberal prejudices. Such distinctions are often simply a matter of conscience salving.