Ethical investment, the future of investing

Ethical investment is a term that was introduced about 10 years ago. Since then, the amount of ethical investments has quadrupled. Investing ethically is all about lending your capital to an institution, which will use your money to invest in companies that act sustainable and ethical. Mark Robertson, from yourethicalmoney.org, says that your investment only has an impact if you put your money into an ethical financial institution and not in a bank that doesn’t have ethical lending policies.

The quantity of ethical investments is still too small compared to other investments. In the UK, ethical investments only represent 1% of the investment market. So how can we raise the amount of ethical investments? The answer lies with us, the investors. People have to get convinced to invest in these ethical funds. The only way that people could get convinced, is by showing them the benefits of these investments. Ethical finance is about making profit while helping social and environmental issues.

A lot of people still believe that investing ethically leads to less profit, but Mark Robertson doesn’t share this view. He assures that you can make as much as profit as other special funds, you only have to find a good fund manager.

I never heard of these investments before. But after reading this article, I might invest ethically in the future. The example of the Westmill Wind Farm co-op is amazing. These turbines can supply enough green energy in a year for 2500 homes while its investors get nice annual returns. 

Source: The Guardian

Van Liedekerke Jonas

The only way to do business long term

Unilever, the second biggest producer of consumer goods in the world, has come up with an ambitious plan for the future. Unilever’s corporate vision is to create a better future in which billions of people can increase their quality of life without increasing their environmental footprint.[1]

More and more of the world’s larger companies start thinking, planning and acting towards a more durable program of business making. Primarily, it’s because consumers and customers want it. Lots of young people are choosing to buy brands that represent a ‘Fair trade’ way of producing. These types of brands, such as Oxfam, Ben & Jerry’s Fair trade ice cream, etc. are more desirable brands. Secondly, it feeds the creativity and innovation. Without it, organizations would not be able to bring new products on the market. Finally, sustainability helps businesses such as Unilever to grow their market shares. Above all that, it is a cost-reducing way to save money in the future.

According to Jonathon Porrit, who is an environmental campaigner and an adviser to Unilever, businesses need to exploit –in a positive way- the current market that begs for change. "There is no way of arriving at a sustainable world that does not involve businesses making money," he said.[2]

I think that in a world where creativity, innovation and growing economic activity are central, environmentally friendly processes should be considered a priority. We need to take the next generations in account. Otherwise, the costs we bring to the nature will keep leveling up. And these impacts will consequently translate into higher business costs.

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List of sources:

[1] http://www.sustainable-living.unilever.com/the-opportunity/

[2] http://www.bbc.co.uk/news/business-11755672

Mathias Aper 

Starbucks, an ethical multinational

Starbucks, the multinational coffee producer, decided in 2009 to become more durable. Even though they still make millions of dollars of profit, they are now taking the environmental aspect into account. This gives Starbucks the label of green corporation. But not only the environment is important for Starbucks, they are also the biggest buyer of fair trade coffee, which is a social aspect.

To help the environment, Starbucks will make all of their cups recyclable and reduce their water and energy consumption. As for the social aspect, Starbucks set up Coffee and Farmer Equity (Cafe) Practices. This guarantees that the farms, which sell coffee beans to Starbucks, meet labour and environmental standards,  like minimum wages and water and agrochemical usage. Starbucks has also sent a part of its employees to these farms, where they had to work, to create an emotional connection between the product and its staff. Starbucks hopes that this will motivate the personnel and that these employees will share their stories with other colleagues and customers.

I think it’s great that a multinational like Starbucks buys fair trade coffee. Also, the results of their Cafe Practices is amazing. The lives of these farmers has changed dramatically. These practices have helped the farmers to increase output while reducing cost and to increase their yield.

Sources:  1 - 2

Van Liedekerke Jonas

Nike, an ethical brand?

Although Nike is one of the largest athletic clothes brands, many critics accuse the company for paying low wages and offering bad working conditions. Nevertheless only few people know that there clothes are manufactured in sweatshops. Nike has tried to improve the working conditions, but has it become an ethical brand?

Nike was founded in 1972 and all clothes and shoes were produced in China and Vietnam, where minimum wages are the lowest in the world, which means less costs. These unethical activities were discovered by groups such as Education for Justice, Students Against Sweatshops, etc. Nike is not the only company who acted in an unethical way, but these groups focused on Nike, because of its leading role. In 1987 the factory workers began to protest. Because of the political and public pressure, Nike decided to improve working conditions and increase the minimum wage. Eventually all factories got a company Code of Conduct, which ensures that the conditions of safety requirements are respected. But despite this code, it seems that the human rights are still ignored.

As one of the major player on the market, Nike should pay respect to the human rights. This would not necessarily mean that their benefits would be less. On the contrary, if people would know that their products are produced ethically, they would be willing to pay a little more. What do the others members think about Nike and his activities?

Used sources:

http://www.ehow.com/about_5485125_nike-sweatshops.html

http://thedawgdude.blogspot.com/

Cornette Guillaume

Profit and decency

The view that maximising profit is the only thing that counts can’t survive in this age of globalisation and instant social media. Reputations of companies can be destroyed immediately if they don’t behave sustainable. Ofcourse, some industries can afford to avoid these environmental and social concerns. Mobile phones are an example of this. They look innocent and harmless, but the Congolese army, who causes violence and uses forced labour, controls a lot of the trades in minerals used in phones.

Big business plays a very important role for the future as well as environmentally, socially and economically. Corporate behaviour will be controlled as it starts to play a major role, especially for developed countries. The relation between western companies and the developing world could lead to two different directions. If western companies act sustainable, resources will be sensibly husbanded and developing countries will become more wealthy, which leads to new markets with new businesses. If western companies ignore responsible behaviour, this could lead to an environmental, social and economic dystopia where nationalism and protectionism would be key-words.

I do agree with the fact that corporate behaviour becomes more and more important, but the view of maximising profit has led to the big economy we have today. Still, sustainability is necessary for the future. The Gulf of Mexico oil spill, which was a recent event, has affected the reputation of BP and is well-known around the world. This is a great example that fits in this context.

Source: The Guardian

Van Liedekerke Jonas

How stress and pressure affects financial performance

Nobel Economics Laureate Milton Friedman mentioned that a business, which is only artificial, cannot have responsibilities, only people can have responsibilities¹. Besides, in a free-enterprise system, it are mainly the corporate executive, the business managers and their decisions in coordinating the company that creates  the identity and culture of the corporation. Taking those two facts into consideration, it seems that the commitment of a company to ethical codes of conduct, strongly depends on the corporate leaders and their ethical behavior.

Recent study² has proven that stress and workplace pressure affect both ethical acting and leaders’ recognition of ethical dilemmas. In addition, it seems that decision makers sometimes compensate themselves in an unethical way caused by a lack of reward and frustration over poor teamwork. Eventually, acting unethically towards your staff, other decision makers and clients leads to negative corporate relations within and outside the company, consequently affecting the corporate culture, efficiency and therefore its financial results. This means that maintaining good business interrelations is of great importance. A way to do so, is for instance more positive feedback on what has been accomplished and enforce the bond and loyalty with the corporate executive and its staff.

In my opinion, I can fully understand that moral issues and extensive negotiations combined with stress, brings the corporate leader to a certain level of unethical behavior.

For example, imagine you are a crisis manager and it is your responsibility to remove employees from their job in order save costs. In this case, I believe that acting strictly is a ‘must’, although this implicates an ethical burden on the crisis manager.
I’m convinced that great leaders are those who have high stress tolerance and are able to operate effectively in stressful situations.

Kenn Crombé

¹ Friedman, Milton, ‘The Social Responsibility Is To

Increase Profits’, New York Times Magazine, September

13, 1970, pp. 32–33.

 ² Ethical Decision Making in Organizations: The Role of Leadership Stress, Marcus Selart, Svein Tvedt Johansen,2010,

    http://www.springerlink.com/content/545337233h013508/fulltext.pdf

Fraudulent financial reporting … much is at stake

Companies have enormous ethical responsibility. When a business collapses due to financial fraud, practically everybody suffers. Accounting scandal ‘Enron’ is a fine example. Enron was an American energy company that was forced into bankruptcy almost a decade ago. Employing 22,000 people and having plenty of shareholders, Enron’s staff of executives and former president Jeffrey Skilling used accounting loopholes and poor financial reporting to hide billions of their losses. Above that, Arthur Andersen, one of the “Big Five” accounting firms, shredded documents related to Enron’s audit. When the scandal unfolded, both Enron and Arthur Andersen were doomed to pull the plug. In the end, thousands of employees lost their job, innumerable shareholders possessed worthless Enron stock and billions were lost.

According to Business Finance Guide, Rosemary Peavler ¹, it is primarily the lack of ethics in finance that leads to a fall. She clarifies that long-term viability and not short term profit is to be the objective of the company to stay alive. Besides, if a corporation strives for ethical responsibility such as the control of pollution, it shall be more respected in the long-term, attract more investments, stimulate business and finally improve the balance sheet. Another point is that just too much is at risk during fraudulent activities. Not only countless employees, investors and shareholders are hurt in the process, but other countries and sectors of the economy are affected as well. Also the society suffers. All in all, moral as well as ethical foundations are being disrespected  heavily. Rosemary explains that it is the responsibility of all business to promote sustainable development and raise the standard of living. I could not agree more.

I figure that to curb fraud even more, ethical commitment must be shared throughout the entire organization, the corporation has to be open in its communication about fraud and stronger control mechanisms such as external audit is to be implemented. My point of view is that pursuing business ethics and eliminating fraud opportunities is crucial for a company to strengthen the chance that it will survive in the long-term. Even more, I think that a lack of business ethics within a corporation almost automatically leads to fraudulent behavior.

¹ http://bizfinance.about.com/od/fraud/a/Financial_Ethics.htm

  http://business-ethics.com/2010/04/29/1302-enron-on-broadway-no-accounting-for-bad-behavior/

Kenn Crombé