Unethical investment

Nature

Unethical investment refers to the allocation of capital into companies, industries, or projects that engage in practices considered morally or socially harmful. This includes activities such as environmental destruction, human rights violations, exploitation of labor, production of harmful products (e.g., tobacco, weapons), or corruption. Unethical investment is problematic because it perpetuates and financially supports behaviors that undermine societal well-being, environmental sustainability, and ethical standards. It can damage reputations, provoke public backlash, and contribute to long-term social and ecological harm, highlighting the need for responsible investment strategies that prioritize ethical considerations alongside financial returns.

Background

Unethical investment emerged as a global concern in the late 20th century, when revelations about financial support for apartheid, environmental destruction, and exploitative labor practices drew public scrutiny. International campaigns and investigative journalism exposed the complicity of major investors, prompting widespread debate and the development of ethical investment criteria. The problem’s significance intensified with globalization, as cross-border capital flows increasingly linked investment decisions to human rights abuses and ecological harm worldwide.

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.