Moral Screening for Investments (Part 2)
October 16, 2013
In Part 1, I addressed how to incorporate a moral stance on investments primarily through the treatment of employees. Most everyone can agree that companies need to be held accountable in regard to being environmentally responsible. While I tend to believe that weapons serve a good purpose when used for defense, I know that some people have concerns about investing in companies that produce weapons of any kind. Some investors focus on animal testing. The list goes on...
What About Those Darn Sin Stocks?
Naturally, for a Christian investment approach, people are going to ask, what about "sin" stocks? For example, what about a publicly traded company whose primary business is the production and sale of pornography? I believe that Christians should avoid those. If you are investing in mutual funds which do not subject themselves to rigorous moral screening, you could possibly be sharing in the profits of such businesses. On the flip side, there is a segment of the market which actively avoids sin stocks. There are Christian and other morals-based funds in existence. What is the reasoning behind the avoidance of sin stocks? Here's a hint: it's not so that we can wag our finger at others, look down on them, or puff ourselves up with the pride of moral superiority.
First, we should recognize that when we sin, we bring destruction upon ourselves and others. In the past, I viewed God as somewhat sadistic, having put us down here and told us not to do the very things that we seem to find appealing. At some point along the way, I was enlightened. I learned that God doesn't tell us not to do certain things because he is mean or doesn't want us to have fun. He doesn't want us to do certain things because those things result in the destruction of ourselves and others. All sin is harmful and destructive in one way or another. It seems logical that we should do our best to avoid promoting and profiting from the harm and destruction of others. Indeed, Jesus affirms this in Luke 17:1, when he says, "Things that cause people to sin are bound to come, but woe to that person through whom they come." (NIV)
Second, consider 1 Timothy 6:10, which says, “For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs." (NIV). The phrase "pierced themselves with many griefs" seems to indicate that these people, possibly among other ways of harming themselves, violated their own conscience in order to seek financial gain. We should not let the love of money cause us to violate the guidance of our own conscience.
For example, because of my own personal experiences, I would not personally invest in a company which has as its primary business the production or sale of alcoholic beverages, no matter how attractive the potential returns. However, it's probably best that I don't go around preaching to others that it is wrong to invest in such a business. To do so would mean using my personal opinions and emotions to draw a conclusion that isn't supported by scripture. Though such use always personally eluded me, it's clear to me from scripture that there is such a thing as good, appropriate, and healthy use of alcohol. So, one could reasonably argue that to the extent consumers are using it in unhealthy ways, that's on them. But I have personally seen the destruction that the product can lead to in people's lives. As well, there are normally innocent victims when someone abuses alcohol. For those reasons, my personal feelings about the subject would cause it to weigh upon my conscience to reap profits from such a company. Therefore, I should not invest in them, no matter how attractive the chance for profit. Alternatively, say you have grown up around people who always had a glass of wine with dinner or a couple of beers on the weekend, but never saw anyone suffering from the abuse of alcohol. You may understandably be asking what the big deal is, and whether BUD represents attractive value right now.
Proverbs 1:19 says, “Such are the paths of all who go after ill-gotten gain; it takes away the life of those who get it.” (NIV) Proverbs 10:2 says, "Ill-gotten treasures have no lasting value, but righteousness delivers from death." (NIV). The New Living Translation uses the term "tainted wealth". The English Standard Version says "treasures gained by wickedness". These terms seem to be broader in scope than "dishonest money" or "exploiting the poor". Alternatively, they could simply be terms meant to encompass all of the other restrictions given in scripture. Either way, these are serious statements that should cause Christians to give careful, deliberate thought to the ways in which we reap profits.
To be clear, I am not advocating a morally legalistic approach to investing. It is not realistic or prudent to attempt such an approach. Trying to strain gnats from our investments would probably result in more harm than good. Besides, we live under grace, and there is no need for a legalistic approach to anything in life (see Gal 5:4). We are broken, sinful people living in a broken, sinful world. If we dig enough, we could probably find something wrong with every single company that ever existed. From a moral perspective, our approach to investing should be driven by our conscience. That is, of course, always subject to knowing and applying clear and relevant biblical instruction, and being led by the Spirit.
So we shouldn't employ legalism or seek moral perfection with investments. Still, there is wisdom in avoiding certain investments based on moral grounds. To me, scripture indicates that what's in our heart will factor into where our money gets invested. If I know that a company has a track record of being seriously unfair, dishonest, or otherwise immoral, and my conscience tells me to avoid the investment, I should do just that. I should not allow greed to get in the way of doing what I believe to be right. We may therefore conclude that it is proper, wise, and beneficial for Christians to employ a reasonable moral screen when investing in the equity of publicly traded companies. However, and this is only anecdotal, but I have found in my life, that it's better to focus on the good I should do, instead of focusing only on trying to avoid the wrong that I shouldn't do. That's because I usually end up avoiding the wrong anyway, and without draining all of my energy. Doing good things seems to actually boost my energy. But trying to become a better person by focusing on what I shouldn't do seems to drain the life out of me, especially when I fail. I just try to do a little better each day. I don't obsess over doing every little thing according to a set of rules. I don't wallow in guilt when I make mistakes. But I don't simply do whatever I feel like doing. I make a reasonable effort to be a good person. I want my thoughts, words, and actions to be pleasing to God. We can take a similar approach to managing investments. We can root around through thousands of companies' activities trying to avoid or take a stand against A, B, C, X, Y, and Z... or, we can expend most of our energy trying to accomplish some good.
Activism Superior To Avoidance In Many Cases
To the extent they can realistically be changed, it may be best to try to affect change in regard to company policies, treatment of employees, giving, and social activism by getting involved. We should encourage shareholder and consumer activism to promote proper corporate governance, as well as responsible moral and social activities on the part of corporations. However, no amount of letter writing or other activism is going to change the fact that Altria Group (MO) is primarily a tobacco company. So, if investing in a tobacco company causes a moral dilemna for you, the solution is simple. Avoid tobacco companies as investments. But don't comb through your entire portfolio trying to ascertain whether any of the stocks you hold profited in any way, at any point along the supply chain from a tobacco product. Retailers sell tobacco. Transportation companies deliver it. The school your child goes to was partially funded with taxes on it. You get the idea.
Clearly, it's important that we employ realistic and reasonable approaches to adhering to moral constraints, otherwise we may get frustrated and give up altogether. When a company's primary business is retail stores/pharmacies, but they happen to own a small online subsidiary which markets pornographic DVDs, among hundreds of other products, it might be best to address that issue in the form of letters and phone calls to company management. That is an issue that could realistically be changed through a small amount of activism. So, it could make sense to take that course of action. But again, primary business lines normally do not change. So, there's really no point trying to get Altria Group to stop selling tobacco.
As I said before, for me personally, it comes back to taking a stand for compassion, fairness, mercy, and love, way more than it does standing against a particular group, sin, behavior, or product. Don't get me wrong, I avoid certain investments. I think it's wise. But, I don't expend too much effort picking apart every detail of every action of every publicly traded company, or the people behind those companies. If that's how I felt led to apply the command to avoid tainted wealth, I would probably just have to look for direct real estate investments, precious metals, or any other investment over which I had complete control. But I don't feel led that way at all. I believe strongly that God used the stock market to bless my mother in a tremendous way over the years. I think it's perfectly fine, and even wise, to invest in dividend paying stocks. Most Christians in the U.S. agree, and are already invested in the stock market in one form or another. We might as well make a reasonable attempt to apply biblical wisdom, do some good with our investments... and of course, avoid certain investments that would violate our conscience.
Since We Can't Be Perfect, Why Try At All?
It should be pretty easy to rule out certain companies based on our personal moral criteria. Unfortunately, a gray area does exist. It's this gray area that leads some to criticize the practice of morally screening one's investments. They argue, correctly, that some degree of connection to ill gotten gains will always remain. They are saying, in effect, that if we can't achieve perfection in regard to moral screening, that we should not do it at all. To what other areas of our lives do we apply such a rigid standard?
For example, we all know for certain that, try as we might, we will never be perfect parents. So, why should we even bother attempting to be good parents? The reality is that all parents make mistakes. Those who attempt to be good parents are really just fooling themselves, so that they can feel superior to all of us normal parents who don't even bother. Further, anyone who has made it their passion and profession to help others achieve the goal of being good parents, such as educators, researchers, counselors, pediatricians, authors, those in various ministries, etc. are just con artists preying upon people's good intentions. You get the idea. It's a silly argument based upon the same logic used by critics of morally screened investing. Obviously, we should try to do the best we can while keeping things reasonable and realistic.
Make An Effort To Apply Wisdom
When reviewing investments, it is wise to ask God for guidance. Ask the Holy Spirit to lead you to make wise and morally sound investment decisions. He gives wisdom generously. Pray for discernment and sound judgment (Proverbs 3:21) in regard to making these decisions. It is not wrong for a Christian to invest money and reap profits. In fact, the Bible is clear that it is wise and good to do so (see our free report What Every Christian Investor Needs to Know). But it is also clear that we should do our best to avoid ill-gotten gains. Therefore, some level of moral screening is necessary. Where you will draw the line is ultimately your decision to make. That's why I encourage readers to build and manage their own portfolios, if possible. It leaves you with the ultimate control to make what you consider to be morally responsible investment decisions.
That conviction is what ultimately led to the creation of this website. The idea behind Wisdom's Reward and our Dividend Focus reports was to provide a low cost tool which would be useful for Christians seeking to invest in the securities of publicly traded companies, in a way that honors God while also helping them reach their financial goals. One of the ways we can honor God with our investment activities is to incorporate some type of moral screening into our decision making process.
With my Dividend Focus reports, I seek to provide commentary and analysis of companies that I believe represent attractive financial value at the time of the report. Perhaps more important, I seek to help believers apply biblical wisdom to their investing activities in a variety of ways. One of those ways is to help subscribers avoid what they might consider to be ill-gotten or unjust gains. I will not be able to achieve perfection in this regard. I almost certainly will not be able to please everyone. However, I am committed to doing my best to help readers find good investments that will also allow them to carry a clean conscience. At the same time, I hope and pray that God will use my efforts not just to help fellow believers accomplish their goals while avoiding certain stocks, but also to work with companies in an activist role that will accomplish good for the world in which we live.
There is now a Part 3 of the Moral Screening For Investments Series that contains important updates. Enjoy!
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